area handbook series 

Finland 

a country study 




Finland 

a country study 

Federal Research Division 
Library of Congress 
Edited by 
Eric Solsten 
and Sandra W. Meditz 
Research Completed 
December 1988 



On the cover: A lion rampant, the Finnish national symbol 



Second Edition, 1990; First Printing, 1990 

Copyright ®1990 United States Government as represented by 
the Secretary of the Army. All rights reserved. 

Library of Congress Cataloging in Publication Data 



Finland: A Country Study. 

Area Handbook series, DA Pam 550-167 
Research completed December 1988. 
Bibliography: pp. 373-420. 
Includes Index. 

1. Finland. I. Solsten, Eric, 1943-. II.Meditz, Sandra W., 1950-. 
III. Federal Research Division. Library of Congress. IV. Area 
Handbook for Finland. V. Series: DA Pam 550-167. 

DL1012.A74 1990 948.97— dc20 89-66315 

CIP 



Headquarters, Department of the Army 
DA Pam 550-167 



For sale by the Superintendent of Documents, U.S. Government Printing GfTice 
Washington, D.C. 20402 



Foreword 



This volume is one in a continuing series of books now being 
prepared by the Federal Research Division of the Library of Con- 
gress under the Country Studies — Area Handbook Program. The 
last page of this book lists the other published studies. 

Most books in the series deal with a particular foreign country, 
describing cind analyzing its political, economic, social, and national 
security systems and institutions, and examining the interrelation- 
ships of those systems and the ways they are shaped by cultural 
factors. Each study is written by a multidisciplinary team of social 
scientists. The authors seek to provide a basic understanding of 
the observed society, striving for a dynamic rather than a static 
portrayal. Particular attention is devoted to the people who make 
up the society, their origins, dominant beliefs and values, their com- 
mon interests and the issues on which they are divided, the nature 
and extent of their involvement with national institutions, and their 
attitudes toward each other and toward their social system and 
political order. 

The books represent the analysis of the authors and should not 
be construed as an expression of an official United States govern- 
ment position, policy, or decision. The authors have sought to 
adhere to accepted standards of scholarly objectivity. Corrections, 
additions, and suggestions for changes from readers will be wel- 
comed for use in future editions. 

Louis R. Mortimer 
Acting Chief 

Federal Research Division 
Library of Congress 
Washington, D.C. 20540 



iii 



Acknowledgements 



While accepting full responsibility for the information and opin- 
ions expressed in this study, the authors are grateful to numerous 
individuals in various agencies of the United States government 
and in international, diplomatic, and private organizations in 
Washington and elsewhere who gave of their time, research materi- 
2ils, and special knowledge. We especisdly want to thank the staff 
of the Embassy of Finland. Specizd thanks must go to Taru Spie- 
gel, Onni and Lulu Rauha, and Pirkko Johnes for their frequent 
aid and assistance. 

The authors also want to thank those who contributed directly 
to the preparation of the manuscript. These include Richard F. 
Nyrop, who reviewed all drafts and served as liaison with the spon- 
soring agency; Ruth Nieland, Gage Ricard, and Sharon Shultz, 
who edited the chapters; Martha E. Hopkins, who managed edit- 
ing and book production; and Barbara Edgerton, J2inie L. Gilchrist, 
and Izella Watson, who did the word processing. Carolyn Hinton 
performed the final prepublication editorial review, and Shirley 
Kessel compiled the index. Linda Peterson of the Library of Con- 
gress Printing and Processing Section performed phototypesetting, 
under the supervision of Peggy Pixley. 

David P. Cabitto, who was assisted by Sandra K. Cotugno and 
Kimberly A. Lord, provided invaluable graphics support. Stan- 
ley M. Sciora supplied information on ranks and insignia. Susan 
M. Lender wrote the section on geography in Chapter 2 and 
reviewed the map drzifts, which were prepared by Harriett R. Blood, 
Kimberly A. Lord, cind Greenhorne and O'Mara. Wayne Horn 
designed the illustrations for the book's cover and the title pages 
for four chapters. Marty Ittner prepared the illustration used for 
the title page of Chapter 2. 



Contents 



Page 

Foreword iii 

Acknowledgments v 

Preface xiii 

Country Profile XV 

Introduction xxiii 

Chapter 1. Historical Setting i 

Paul Rood 

ORIGINS OF THE FINNS 4 

THE ERA OF SWEDISH RULE, c. 1150-1809 5 

Medieval Society and Economy 7 

The Kalmar Union 9 

The Reformation 10 

Finland and the Swedish Empire 12 

THE RUSSIAN GRAND DUCHY OF FINLAND, 

1809-1917 16 

The Rise of Finnish Nationalism 17 

Social and Economic Developments 20 

The Era of Russiflcation 23 

INDEPENDENCE AND THE INTERWAR ERA, 

1917-39 26 

The Finnish Civil War 26 

The Establishment of Finnish Democracy 33 

Finnish Security Policy Between the Wars 39 

WORLD WAR II, 1939-45 41 

The Winter War 42 

The Continuation War 47 

The Lapland War 50 

The Effects of the War 52 

THE POSTWAR ERA 53 

The Cold War and the Treaty of 1948 53 

Domestic Developments and Foreign Pohtics, 

1948-66 57 

Finland in the Era of Consensus, 1966-81 64 



vii 



Chapter 2. The Society and Its Environment 7i 

Eric Solsten 

GEOGRAPHY 74 

Size, External Boundaries, and Geology 74 

Landform Regions 75 

Climate 79 

DEMOGRAPHY 79 

External Migration 81 

Internal Migration 81 

Urbanization 84 

SOCIAL STRUCTURE 84 

Occupational and Wage Structure 85 

Class Structure 87 

FAMILY LIFE 90 

Marriage 90 

Status of Women 91 

MINORITY GROUPS 93 

Lapps 94 

Swedish-speaking Finns 96 

Gypsies 101 

Jewish and Muslim Communities 102 

RELIGION 103 

Role of Religion 103 

Lutheran Church of Finland 105 

Orthodox Church of Finland 110 

Smaller Registered Churches 112 

EDUCATION 112 

Primary and Secondary Education 113 

Higher Education 116 

Adult Education 118 

PUBLIC WELFARE 118 

Growth of the Social Welfare System 118 

Organization of the Welfare System 120 

Income Security Programs Classified 

as Social Insurance 120 

Income Security Classified as Welfare 124 

Health System 129 

LIVING CONDITIONS 132 

Protection of the Environment 133 

Housing 135 

Chapter 3. The Economy 139 

Paul M. Pitman III 

GROWTH AND STRUCTURE OF THE ECONOMY 142 



Vlll 



Economic Development 143 

Structure of the Economy 147 

ROLE OF GOVERNMENT 150 

Macroeconomic Policy 152 

Public Finance 154 

HUMAN RESOURCES 156 

Employment 156 

Industrial Relations 158 

AGRICULTURE, FORESTRY, AND 

FISHERIES 160 

Agriculture 160 

Forestry 169 

Fisheries 172 

ENERGY AND MINERAL RESOURCES 172 

Energy 172 

Minerals 176 

INDUSTRY 178 

Industrial Policy 182 

Wood-Processing Industries 183 

Metal Industries 185 

Other Industries 189 

SERVICES 191 

Banking and Finance 191 

Transportation and Communications 195 

Tourism 199 

FOREIGN ECONOMIC RELATIONS 199 

Foreign Trade 200 

Finnish Direct Investment Abroad 205 

Balance of Payments 206 

Regional Economic Integration 207 

Chapter 4. Government and Politics 215 

Eric Solsten 

CONSTITUTIONAL FRAMEWORK 219 

Constitutional Development 219 

The Constitution 221 

GOVERNMENTAL INSTITUTIONS 222 

Legislature 223 

President 229 

Council of State 232 

Legal System 235 

Civil Service 238 

Provincial Administration 240 

Local Administration 240 



ix 



Electoral System 243 

Aland Islands 245 

POLITICAL DYNAMICS 246 

The Social Democratic Party 248 

The Center Party 252 

The National Coalition Party 254 

The Communist Party of Finland 255 

The Swedish People's Party 258 

Smaller Parties and the Greens 259 

Interest Groups 261 

The Presidential Election of 1982 and Koivisto's 

Presidency 263 

The Parliamentary Election of 1983 264 

The Parliamentary Election of 1987 267 

The Presidential Election of 1988 268 

Mass Media 269 

FOREIGN RELATIONS 275 

Neutrality 275 

Soviet Union 278 

Nordic Europe 282 

Western Europe 284 

United States 285 

United Nations and the Third World 285 

Chapter 5. National Security 289 

Jean R. Tartter 

MILITARY HERITAGE 293 

TREATY COMMITMENTS AFFECTING 

NATIONAL SECURITY 296 

GEOSTRATEGIC SITUATION 298 

CONCEPTS OF NATIONAL SECURITY 302 

THE ARMED FORCES 305 

Command Structure 307 

Army 308 

Navy 310 

Air Force 312 

Conscription and Reserve Duty 315 

Training and Education 318 

Uniforms and Insignia 319 

Conditions of Service 322 

DEFENSE SPENDING 323 

THE ARMED FORCES IN NATIONAL LIFE 324 

UNITED NATIONS PEACEKEEPING 

ACTIVITIES 326 



X 



SOURCES OF EQUIPMENT 327 

Arms Acquisitions from Foreign Suppliers 328 

Domestic Arms Production 329 

CIVIL DEFENSE 330 

PUBLIC ORDER AND SECURITY 332 

Police Organization 332 

Central Criminal Police 335 

Mobile Police 335 

Security Police 335 

Police Training 336 

Frontier Guard 336 

CRIMINAL JUSTICE SYSTEM 338 

Principles of Criminal Justice 338 

Criminal Courts 340 

Incidence of Crime 342 

Sentencing and Punishment 342 

Drug Enforcement 344 

Appendix A. Tables 347 

Appendix B. Treaty of Friendship, Cooperation, 
and Mutual Assistance between the Republic 
of Finland and the Union of Soviet 

Socialist Republics 371 

Bibliography 373 

Glossary 421 

Index 425 

List of Figures 

1 Administrative Divisions of Finland, 1988 xxii 

2 Historic2il Regions 6 

3 Finland to 1617 8 

4 Sweden-Finland, Sixteenth to Eighteenth Centuries 14 

5 Grand Duchy of Finland, 1809-1917 18 

6 Republic of Finland, 1917-40 28 

7 Finland, Adjustments to the Frontier, 1940-44 46 

8 Topography and Drainage 78 

9 Population by Age and Sex, 1986 80 

10 Population Density by Province, 1981 82 

11 Areas Inhabited by Swedish- speaking Finns up to 1910 .... 98 

12 Language Areas of Finland, 1976 100 

13 Education System, 1980s 114 

14 Structure of Gross Domestic Product (GDP), 1950 148 



xi 



15 Structure of Gross Domestic Product (GDP), 1986 149 

16 Agriculture and Forestry, 1985 168 

17 Minerals and Industries, 1985 180 

18 Transportation System, 1986 196 

19 System of Government, 1988 224 

20 Organization of National Defense, 1988 306 

21 Air and Coastal Defenses, 1988 314 

22 Officer Ranks and Insignia, 1987 320 

23 Enlisted Ranks and Insignia, 1987 321 

24 Police and Frontier Guard Organization, 1988 334 



xii 



Preface 



Like its predecessor, this study is an attempt to treat in a com- 
pact and objective manner the dominant social, economic, and mili- 
tary aspects of contemporary Finland. Sources of information 
included scholarly books, journals, and monographs, official reports 
of governments and international organizations, numerous peri- 
odicals, and interviews with individuals having speci2il competence 
in Finnish and Nordic affairs. Chapter bibliographies appear at 
the end of the book; brief comments on sources recommended for 
further reading appear at the end of each chapter. Measurements 
are given in the metric system; a conversion table is provided to 
assist readers unfamiliar with metric measurements (see table 1 , 
Appendix A). A glossary is 2ilso included. 

There are two official languages in Finland, Finnish and Swed- 
ish. The latter language, once dominant, is now spoken as a first 
language by only 6 percent of Finland's population. For this rea- 
son, Finnish place-names are used throughout this volume. An 
exception was made only when referring to the Aland Islands and 
to their capital, Mariehamn, where the Swedish forms are preferred. 
In cases where it could be useful for a reader to know a Swedish 
place-name, it has been provided in parentheses after the Finnish 
place-name. Table 2, Appendix A, lists the Finnish and Swedish 
names of the country's twelve provinces and of several dozen other 
geographic sites. 



xiii 



Country Profile 




Country 

Formal Name: Republic of Finland 
Short Form: Finland 
Term for Citizens: Finns 
Capital: Helsinki 



XV 



Date of Independence: December 6, 1917. 

Geography 

Size: About 338,145 square kilometers, slightly larger than 
Missouri and Illinois combined. About 10 percent of area made 
up of inland water. A quarter of the country above Arctic Circle. 

Topography: Four natural regions. Archipelago Finland begins 
in southwestern coastal waters and culminates in Aland Islands. 
Coastal Finland a band of clay plains, extending from Soviet 
to Swedish border. Seldom exceeding width of 100 kilometers, 
plains slope upward to central plateau that forms basis of inte- 
rior lake district. This core region contains more than 55,000 lakes 
set within country's densest forests. Above central plateau, up- 
land Finland extends into Lapland, where forests gradually yield 
to harsh climate. Above timber line are barren fells and numerous 
bogs. Upland Finland crossed by country's largest and longest 
rivers. 

Climate: Gulf Stream and North Atlantic Drift Current moder- 
ate temperatures somewhat, but winter still lasts up to seven months 
in north, and most years gulfs of Finland and Bothnia freeze, 
making icebreakers necessary for shipping. Long days in sum- 
mer permit farming far to north. Continental weather systems can 
bring quite warm summer temperatures and severe cold spells 
in winter. 

Society 

Population: About 4.9 million at end of 1985, averaging 14.5 
inhabitants per square kilometer. Population growth 0.5 percent 
per year during 1980-84 period. About 60 percent of population 
lived in urban municipalities in 1980s. 

Language: Two official languages; Finnish spoken by 94 percent 
of population; Swedish spoken by 6 percent, most of whom live 
in southwestern and western coastal areas and Aland Islands. 

Religion: Two official state churches; Lutheran Church of Fin- 
land with 88.9 percent of population as members; Orthodox Church 
of Finland with 1.1 percent. Constitutionally guaranteed freedom 
of religion permits existence of severed dozen other religions. About 
7 percent of Finns belong to no religion. 

Education: A little more than 900,000 Finns attended schools and 
institutions of higher education in 1985. About half this number, 
aged seven to sixteen, enrolled in obligatory comprehensive school 



XVI 



system. Around 100,000 each studied at academic high schools and 
country's twenty university-level facilities, while remainder were 
at multitude of institutions that provided career training of vary- 
ing levels and duration. 

Health and Welfare: Legislation guarantees all Finns high-quality 
health care regardless of income. Health problems resemble those 
of other countries of Northern Europe, with cardiovascular dis- 
eases and cancer chief causes of death. In mid-1980s, Finland had 
world's lowest infant mortality rate. Welfare and social security 
legislation provide family and unemployment 2illowances and dis- 
ability and retirement benefits. 

Economy 

Gross Domestic Product (GDP): US$70.5 billion in 1986 
(US$14,388 per capita). Economy grew faster than other Western 
industrialized countries throughout 1980s, averaging about 3.3 per- 
cent per year from 1980 to 1986. 

Agriculture and Forestry: Below 8 percent of GDP and about 
10 percent of employment in 1986, but sufficient to make country 
self-sufficient in staple foods and provide raw material to crucial 
wood-processing industries. 

Industry: Major growth sector, contributing nearly 35 percent of 
GDP and 32 percent of employment in 1986. Main engine of post- 
war structural change, industry faced increasing competition in 
1980s causing restructuring and a shift to high-technology products. 

Services: Largest sector, providing nearly 58 percent of GDP and 
about 57 percent of employment in 1986. Generally labor-intensive 
and uncompetitive, but banking, engineering, and consulting 
showed promise. 

Imports: Raw materials, especially fuels, minerals, and chemicals, 
but growing share of foods and consumer goods. 

Exports: Primarily industrial goods, especially forestry products 
and metal products; growing high- technology exports. 

Major Trade Partners: Soviet Union largest single trade partner, 
but West European countries together accounted for nearly two- 
thirds of trade. 

Balance of Payments: Despite positive trade balance, Finnish 
tourist expenditures abroad and debt service caused continuing cur- 
rent account deficits in 1980s. 



xvii 



General Economic Conditions: Standard of living high despite 
difficult environment. Inflation traditionally exceeded that of other 
industrialized countries, but fell below 4 percent in 1986; unem- 
ployment, at about 6 percent in 1987, was considered Finland's 
most serious economic problem. 

Exchange Rate: In March 1988, Finnish mark (Fmk) 4.08 = US$1. 
Fully convertible, but some capital controls maintained by Bank 
of Finland. 

Transportation and Communications 

Railroads: 5,905 kilometers (Russian gauge — 1.524 meters) in 
operation, of which about 500 kilometers multiple-track and 1,445 
kilometers electrified in 1987. Railroads used primarily for bulk 
commodities because of growing competition from trucking. 

Highways: About 76,000 kilometers in 1987 (including 43,000 
paved). Another 30,000 kilometers of private, state- subsidized 
roads. 

Inland Waterways: About 9,200 kilometers of floatways used by 
wood industries to move forest products downstream to process- 
ing centers and on to ports for export. Another 6,100 kilometers 
of internal waterways for general use, including about 70 kilome- 
ters of canals. 

Ports: Seven major ports, many minor ports. Most ports blocked 
by ice in winter. 

Civil Airports: Helsinki airport handled most international traffic; 
about forty smaller airports served secondary cities. 

Telecommunications: Excellent system covering most cities; 
mobile telephones widely used in rural areas. 

Government and Politics 

Government: Constitution Act of 1919 basis of system of govern- 
ment both parliamentary 2ind presidential. Division of power among 
legislative, executive, and judicial branches only partial, and result- 
ing overlapping of competencies ensures that authorities act 
according to Constitution. Supreme power rests with the Finnish 
people, who elect through universal suffrage 200-member Edus- 
kunta, country's parliament. This body ultimately more powerful 
than president, the supreme executive, who often can act only 
through Council of State, or cabinet, whose members come main- 
ly from Eduskunta. 



xviii 



Politics: As many as a dozen parties actively articulate wide range 
of political viewpoints. Smaller number of parties, socialist and non- 
socialist, have participated in cabinet governments in the postwar 
era. All parties with members in Eduskunta receive state subsi- 
dies. Party newspapers also enjoy state financiad support. 

Legal System: Independent judges and constitutional guarantees 
protect integrity of judicial system consisting of general courts that 
deal with civil and criminal cases and administrative courts con- 
cerned with appeals against decisions of government agencies. 
General courts exist at three levels: local, appeal, and Supreme 
Court; administrative courts exist at provincial and Supreme 
Administrative Court levels. Chancellor of justice, Finland's highest 
prosecutor, and parliamentary ombudsman charged with rectify- 
ing legal injustice. 

Foreign Relations: Finland follows what is officially termed an 
active and peaceful policy of neutrality. Member of Nordic Coun- 
cil, European Free Trade Association (EFT A), Council of Europe, 
and United Nations (UN). 

National Security 

Armed Forces (1988): Defense Forces consist of army of 30,000 
troops (22,300 conscripts), navy of 2,700 (1,300 conscripts), and 
air force of 2,500 (1 ,300 conscripts). In time of crisis or hostilities, 
Fast Deployment Forces of 250,000 could be mobilized in two to 
three days. Full mobilization of 700,000 could be carried out in 
a week. Frontier Guard (Rajavartiolaitos— RVL) of 4,500 (1 1 ,500 
on mobilization) would come under military command. 

Treaty Commitments: By 1947 Treaty of Paris, active Finnish 
armed forces limited to 41,900 persons, total warship tonnage to 
10,000 tons, and combat aircraft to 60. Offensive weapons such 
as bombers and submarines prohibited. The 1948 Treaty of Friend- 
ship, Cooperation, and Mutual Assistance (EC MA) with Soviet 
Union commits Finland, with Soviet assistance if needed, to repel 
aggression by Germany or any state allied to it. 

Conscription and Reserves: Over 90 percent of Finnish men per- 
form eight months of military service at age twenty (eleven months 
for officers and noncommissioned officers in reserves). Reserve 
obligation continues until at least age fifty. Younger reservists sub- 
ject to periodic refresher training. 

Standing Forces: In 1988 army organized into 7 light infantry and 
1 armored brigade, each with 1,500 to 2,000 men in peacetime. 



xix 



plus independent infantry battalions, field and coast artillery, and 
antiaircraft units. In wartime would consist of an estimated 20 to 
25 brigades at full strength of 6,800 each, plus 70 independent light 
infantry battalions of 800 each, and other specialized units. Navy 
has two corvettes, eight missile boats, fast patrol craft, minelay- 
ers, and minesweepers. Air Force consists of sixty fighters organized 
into three squadrons, forty-seven jet training- reconnaissance air- 
craft convertible to attack role, and small fleet of transport and liai- 
son aircraft. 

Sources of Equipment: Finland produces close to 40 percent of 
its own equipment, including light arms, artillery, vehicles, muni- 
tions, hulls, and light aircraft. Soviet Union supplies about half 
of imports, including tanks and armored vehicles, missiles, and 
MiG aircraft. Remainder comes from West, including Sweden 
(fighter aircraft and missiles), Britain (jet trainers), France (radar 
and missiles), and United States (electronics and antitank missiles). 

Defense Expenditures: In 1988 defense budget of US$1.47 bil- 
lion was about 1.5 percent of gross national product and 5.5 per- 
cent of total government budget. Defense spending low relative 
to other countries of Europe. 

Internal Security: Police cire part of national government aind oper- 
ate under control of Ministry of Interior. Loc2d police, supervised 
by provincial authorities and organized into town police depart- 
ments cind rural police districts, manage routine police work. Oper- 
ating at national level and assisting local police when necessary are 
Mobile Police (Liikkuva Poliisi — LP), responsible for traffic safe- 
ty and riot control; Security Police (Suojelupoliisi — SUPO), charged 
with preventing subversion and espionage; and Central Criminal 
Police (Keskusrikospoliisi — KRP), able to mount extensive inves- 
tigations, with advanced technical means when required, and main- 
tain centralized criminal files and contacts with foreign police forces. 
RVL and Coast Guard, also under Ministry of Interior, responsi- 
ble for security in border areas and have military role in wartime. 



XX 



-•- International boundary 
- - Provincial boundary 
® National capital 
• Provincial capital 
50 100 Kilometers 




Figure 1. Administrative Divisions of Finland, 1988 



xxii 



Introduction 



FINLAND HAS BEEN THE SITE of human habitation since 
the last ice age ended 10,000 years ago. When the first Swedish- 
speaking settlers arrived in the ninth century, the country was home 
to people speaking languages belonging to the distinctive Finno- 
Ugric linguistic group, unrelated to the more prevalent Indo- 
European language family. The first dates in Finnish history are 
connected with the Swedish crusade of the 1150s that, according 
to legend, aimed at conquering the "heathen" Finns and converting 
them to Christianity. There was, however, no Swedish conquest 
of Finland. The bodies of water that lay between Finland and 
Sweden, rather than making them enemies or separating them, 
brought them together. Trade and setdement between the two areas 
intensified, and a political entity, the dual kingdom of Sweden- 
Finland, gradually evolved (see The Era of Swedish Rule, c. 
1150-1809, ch. 1). 

During the seven centuries of Swedish rule, Finland was brought 
more and more into the kingdom's administrative system. Finland's 
ruling elite, invariably drawn from the country's Swedish- speaking 
inhabitants, traveled to Stockholm to participate in the Diet of the 
Four Estates and to help manage the kingdom's affairs. Swedish 
became the language of law and commerce in Finland; Finnish was 
spoken by the peasantry living away from the coasts. The clergy 
(Lutheran after the Protestant Reformation), who needed to com- 
municate with their parishioners, were the only members of the 
educated classes likely to know Finnish well. 

Swedish rule was benevolent. Sweden and Finland were not 
separate countries, but rather were regions in a single state. The 
elite spoke a common language, and it was not until late in the 
eighteenth century that any separatist sentiments were heard within 
Finland. However, Finns occasionally suffered much from Sweden's 
wars with neighboring states. In the sixteenth and the seventeenth 
centuries, Sweden was one of Europe's great powers and had a 
considerable empire around the shores of the Baltic Sea. Wars were 
frequently the means of settling Finland's eastern border. In the 
long run, however, Sweden could not sustain its imperial preten- 
sions, and military defeats obliged it to cede Finland to tsarist Russia 
in 1809. 

Finland's new ruler. Tsar Alexander I, convinced of the stra- 
tegic need to control Finland for the protection of his capital at 
St. Petersburg, decided it was more expedient to woo his Finnish 



XXlll 



subjects to allegiance than to subjugate them by force. He made 
the country the Grand Duchy of Finland and granted it an autono- 
mous status within the empire (see The Russian Grand Duchy of 
Finland, 1809-1917, ch. 1). The Grand Duchy kept its Swedish 
code of laws, its governmental structure and bureaucracy, its Lu- 
theran religion, and its native languages. In addition, Finns re- 
mained free of obligations connected to the empire, such as the 
duty to serve in tsarist armies, and they enjoyed certain rights that 
citizens from other parts of the empire did not have. 

Nevertheless, the Grand Duchy was not a democratic state. The 
tsar retained supreme power and ruled through the highest offi- 
cial in the land, the governor general, almost always a Russian 
officer. Alexander dissolved the Diet of the Four Estates shortly 
after convening it in 1809, and it did not meet again for half a cen- 
tury. The tsar's actions were in accordance with the royalist con- 
stitution Finland had inherited from Sweden. The Finns had no 
guarantees of liberty, but depended on the tsar's goodwill for any 
freedoms they enjoyed. When Alexander II, the Tsar Liberator, 
convened the Diet again in 1863, he did so not to fulfill any obli- 
gation but to meet growing pressures for reform within the empire 
as a whole. In the remaining decades of the century, the Diet 
enacted numerous legislative measures that modernized Finland's 
system of law, made its public administration more efficient, 
removed obstacles to commerce, and prepared the ground for the 
country's independence in the next century. 

The wave of romantic nationalism that appeared in Europe in 
the first half of the nineteenth century had profound effects in Fin- 
land (see The Rise of Finnish Nationalism, ch. 1). For hundreds 
of years, Finland's Swedish- speaking minority had directed the 
country's affairs. The Finnish-speaking majority, setded mostly 
in the interior regions, was involved only marginally in the social 
and the commercial developments along the coast. Finnish- speakers 
wishing to rise in society learned Swedish. Few schools used Fin- 
nish as a means of instruction: higher education was conducted 
entirely in Swedish, and books in Finnish were usually on religious 
subjects. The nationalist movement in Finland created an interest 
in the language and the folklore of the Finnish- speaking majority. 
Scholars set out into the countryside to learn what they could of 
the traditional arts. Elias Lonnrot, the most important of these men, 
first published his collection of Finnish folk poems in 1835. This 
collection, the Kalevala, was quickly recognized as Finland's national 
epic. It became the cornerstone of the movement that aimed at 
transforming rural Finnish dialects into a language suitable for 
modern life and capable of displacing Swedish as the language of 



xxiv 



law, commerce, and culture. 

Several generations of struggle were needed before the Finnish 
nationadist movement realized its objectives. Numerous members 
of the Swedish-speaking community entered the C2impaign, adopting 
Finnish as their language and exchanging their Swedish family 
names for Finnish ones. Finnish journals were founded, and Fin- 
nish became an official language in 1863. By the end of the century, 
there was a slight majority of Finnish- speciking students at the 
University of Helsinki, and Finnish- speakers made up sizable por- 
tions of the professions. 

Finland's first politicEil parties grew out of the language strug- 
gle. Those advocating full rights for Finnish-speakers formed the 
so-called Fennoman group that by the 1890s had split into the Old 
Finns and the Young Finns, the former mainly concerned with the 
language question, the latter urging the introduction of political 
liberalism. The Swedish- speaking community formed a short-lived 
Liberal Party. As the century drew to a close and the Fennoman 
movement had achieved its principcd goals, economic issues and 
relations with the tsarist empire came to dominate politics. 

Finland's economy had always been predominandy agriculturcd, 
and with the exception of a small merchant class along the coast, 
nearly all Finns were engaged in farming, mostly on small family 
farms (see Growth and Structure of the Economy, ch. 3). Despite 
the location of the country in the high north, long summer days 
usually allowed harvests sufficient to support the country's popu- 
lation, although many lived at a subsistence level. In years of poor 
harvests, however, famine was possible. In 1867-68, for example, 
about 8 percent of the population starved to death. 

Sweden's political development had favored the formation of an 
independent peaszintry rather than a class of large landowners. Even 
while part of the tsarist empire, Finland maintained this tradition. 
As a result, instead of serfs, there were many independent sm2dl 
farmers, who, in addition to owning their land, had stands of tim- 
ber they could sell. When Western Europe began to buy Finnish 
timber on a large scale in the latter part of the nineteenth century, 
many farmers profited from the sale of Finland's only significant 
natural resource, and ready money transformed many of them into 
entrepreneurs. There was also demand for timber products, and, 
at sites close to both timber and means of transport, pulp and paper 
mills were constructed. 

Liberalization of trade laws and the institution of a national cur- 
rency not tied to the Russian ruble encouraged a quickening of 
the economy and the growth of other sectors. Finland's position 
within the Russian Empire was also beneficial. As Finnish products 



XXV 



were not subject to import duties, they could be sold at lower prices 
than comparable goods coming from Western Europe. 

The appearance of an industrial sector offered employment to 
a rural work force, many of whom owned no land and earned their 
living as tenant farmers or laborers. Much of the employment 
offered was of a seasonEil nature, a circumstance that meant con- 
siderable hardship. In contrast to the larger European countries, 
most of this emerging proletariat did not live in concentrated urban 
areas, but near numerous small industrial centers airound the coun- 
try. This had two results: the one was that the Finnish working 
class retained much of its rural character; the other was that labor 
problems affected the entire country, not just urban centers. 

Finland's modernizing economy encouraged the formation of 
social groups with specific, and sometimes opposing, interests. In 
addition to the Finnish movement's Old and Young Finns, other 
political organizations came into being. Because the existing political 
groups did not adequately represent labor's interests, a workers' 
party was formed at the end of the century. In 1903 it became the 
Finnish SociaJ Democratic Party (Suomen Sosialidemokraattinen 
Puolue — SDP). At the same time labor was organizing itself, the 
farmers began a cooperative movement; in 1907 they formed the 
Agrarian Party (Maalaisliitto — ML). The Swedish People's Party 
(Svenska Folkpartiet — SEP), also dating from this period, was 
formed to serve the entire Swedish- speaking population, not just 
those involved in commerce, an area where Swedish- speakers were 
still dominant. 

The Grand Duchy's relationship with St. Petersburg began to 
deteriorate in the 1890s. The nervousness of tsarist officials about 
Finnish loyalty in wartime prompted measures to bind Finland more 
closely to the empire. The campaign of "Russification' ' ended only 
with Finland's independence in 1917 (see The Era of Russifica- 
tion, ch. 1). In retrospect the campaign can be seen as a failure, 
but for severad decades it caused much turmoil within Finland, 
reaching its most extreme point with the assassination of the gover- 
nor general in 1904. The first Russian revolution, that of 1905, 
allowed Finns to discard their antiquated Diet and to replace it with 
a unicameral legislature, the Eduskunta, elected through univer- 
S2d suffrage. Finland became the first European nation in which 
women had the franchise. The first national election, that of 1907, 
yielded Europe's largest social democratic parliamentary faction. 
In a single step, Finland went from being one of Europe's most 
politically backward countries to being one of its most advanced. 
Nonetheless, frequent dissolutions at the hands of the tsar permit- 
ted the Eduskunta to achieve little before independence. 



xxvi 



The second Russian revolution allowed Finland to break away 
from the Russian empire, and independence was declared on 
December 6, 1917. Within weeks, domestic political differences 
led to an armed struggle among Finns themselves that lasted until 
May 1918, when right-wing forces, with some German assistance, 
were able to claim victory (see The Finnish Civil War, ch. 1). 
Whether seen as a civil war or as a war of independence, the con- 
flict created bitter political divisions that endured for decades. As 
a consequence, Finland began its existence as an independent state 
with a considerable segment of its people estranged from the holders 
of power, a circumstance that caused much strife in Finnish politics. 

In mid-1919, Finns agreed on a new Constitution, one that con- 
structed a modern parliamentary system of government from 
existing political institutions and traditions. The 200-seat unicameral 
parliament, the Eduskunta, was retained. A cabinet, the Council 
of State, was fashioned from the Senate of the tsarist period. A 
powerful presidency, derived, in part at least, from the office of 
governor general, was created and provided with a mixture of pow- 
ers and duties that, in other countries, might be shared by such 
figures as king, president, and prime minister. Also included in 
the new governmental system was an independent judiciary. The 
powers of the three branches of government were controlled through 
an overlapping of powers, rather than a strict separation of pow- 
ers (see Governmental Institutions, ch. 4). 

Finland faced numerous political and economic difficulties in the 
interwar years, but it surmounted them better than many other 
European countries (see Independence and the Interwar Era, 
1917-39, ch. 1). Despite the instability of many short-lived govern- 
ments, the political system held together during the first decades 
of independence. While other countries succumbed to right-wing 
forces, Finland had only a brush with fascism. Communist organi- 
zations were banned, and their representatives in the Eduskunta 
arrested, but the SDP was able to recover from wounds sustained 
during the Civil War and was returned to power. In 1937 the party 
formed the first of the so-called Red-Earth coalitions with the ML, 
the most common party combination of the next fifty years, one 
that brought together the parties representing the two largest so- 
cial groups. The language problem was largely resolved by provi- 
sions in the Constitution that protected the rights of the 
Swedish- speaking minority. Bitterness about the past dominance 
of Swedish- speaking Finns remained ailive in some segments of the 
population, but Finnish at last had a just place in the country's 
economic and socicd life. 



xxvu 



Finland's economy diversified further during the the 1920s and 
the 1930s. Timber, the country's "green gold," remained essen- 
tial, but timber products such as pulp and paper came to displace 
timber as the most important export. Government measures, such 
as nationalization of some industries and public investment in 
others, encouraged the growth and strengthening of the mining, 
chemiccd, and metallurgiczd industries. Nevertheless, agriculture 
continued to be more important in Finland than it was in many 
other countries of Western Europe. Government-enforced redis- 
tribution of plots of land reduced the number of landless workers 
and fostered the development of the family farm. Survival during 
the Great Depression dictated that Finnish farmers switch from 
animal products for export to grains for domestic consumption. 

Finl2ind's official foreign policy of neutrality in the interwar period 
could not offset the strategic importance of the country's territory 
to Nazi Germany and to the Soviet Union (see World War II, 
1939-45, ch. 1). The latter was convinced that it had a defensive 
need to ensure that Finland would not be used as an avenue for 
attack on its northwestern areas, especially on Leningrad. When 
Finland refused to accede to its demands for some territory, the 
Soviet Union launched an attack in November 1939. A valiant Fin- 
nish defense, led by Carl Gustaf Emil Mannerheim, slowed the 
invaders, but in March 1940 the Winter War ended when Fin- 
land agreed to cede to the Soviets about 10 percent of Finnish ter- 
ritory and to permit a Soviet military base on Finnish soil. In June 
1941 , Finland joined Germany as cobelligerent in its attack on the 
Soviet Union. In what Finns call the Continuation War, Finland 
confined its military actions to areas near its prewar borders. In 
the fall of 1944, Finland made a separate peace with the Soviet 
Union, one that was conditional on its ceding territory, granting 
basing rights, agreeing to onerous reparation payments, and 
expelling German forces from its territory. However, although Fin- 
land suffered greatly during World War II and lost some territo- 
ry, it was never occupied, and it survived the war with its 
independence intact. 

Finland faced daunting ch2illenges in the immediate postwar 
years. The most pressing perhaps was the settlement of 400,000 
Finns formerly residing in territory ceded to the Soviet Union. Most 
were natives of Karelia. Legislation that sequestered land through- 
out the country and levied sacrifices on the whole population 
provided homes for these displaced Finns. Another hurdle was get- 
ting the economy in shape to make reparation payments equiva- 
lent to US$300 million, most of it in kind, to the Soviet Union. 
This payment entailed a huge effort, successfully completed in 1952. 



XXVlll 



A less concrete problem, but ultimately a more important one, 
was the regulation of Finland's international relations (see The Cold 
War and the Treaty of 1948, ch. 1; Foreign Relations, ch. 4), The 
Treaty of Paris, signed in 1947, limited the size and the nature 
of Finland's armed forces. Weapons were to be solely defensive. 
A deepening of postwar tensions led a year later to the Treaty of 
Friendship, Cooperation, and Mutual Assistance (FCMA — see 
Appendix B) with the Soviet Union, the treaty that has been the 
foundation of Finnish foreign relations in the postwar era. Under 
the terms of the treaty, Finland is bound to confer with the Soviets 
and perhaps to accept their aid if an attack from Germany, or coun- 
tries allied with Germany, seems likely. The treaty prescribes con- 
sultations between the two countries, but it is not a mechanism 
for automatic Soviet intervention in a time of crisis. The treaty 
has worked well, and it has been renewed severad times, the last 
time in 1983. What the Soviet Union saw as its strategic defensive 
need — a secure northwestern border — was met. The Finns also 
achieved their objective in that Finland remained an independent 
nation. 

The Finnish architect of the treaty, Juho Kusti Paasikivi, a lead- 
ing conservative politician, saw that an essential element of Fin- 
nish foreign policy must be a credible guarantee to the Soviet Union 
that it need not fear attack from, or through, Finnish territory. 
Because a policy of neutrality was a political component of this 
guarantee, Finland would ally itself with no one. Another aspect 
of the guarantee was that Finnish defenses had to be sufficiently 
strong to defend the nation's territory (see Concepts of National 
Security, ch. 5). This policy, continued after Paasikivi' s term as 
president (1946-56) by Urho Kekkonen (1956-81) and Mauno 
Koivisto (1982- ), remained the core of Finland's foreign relations. 

In the following decades, Finland maintained its neutrality and 
independence. It had moved from temporary isolation in the 
immediate postwar years to full membership in the community of 
nations by the end of the 1980s. Finland joined the United Nations 
(UN) and the Nordic Council in 1955. It became an associate mem- 
ber of the European Free Trade Association (EFTA — see Glossary) 
in 1961 and a full member in 1986. Relations with the European 
Community (EC — see Glossary) and the Council of Mutual Eco- 
nomic Assistance (CMEA, CEMA, or Comecon — see Glossary) 
date from the first half of the 1970s. In mid-1989, Finland joined 
the Council of Europe (see Glossary). The policy of neutradity 
became more active in the 1960s, when Finland began to play a 
larger role in the UN, most notably in its peacekeeping forces. 
Measures aiming at increasing world peace have also been a 



XXIX 



hallmark of this policy. Since the 1960s, Finland has urged the for- 
mation of a Nordic Nuclear- Weapons-Free Zone (Nordic NWFZ), 
and in the 1970s was the host of the Conference on Security and 
Cooperation in Europe (CSCE), which culminated in the signing 
of the Helsinki Accords in 1975. By the end of the 1980s, the most 
serious question for Finland in international relations was how the 
country's economy, heavily dependent on exports, would fare once 
the EC had achieved its goal of a single market in 1992. Finland's 
neutrality seemed to preclude membership in an organization where 
foreign policy concerns were no longer left to individual member 
nations. 

Finland also dealt effectively with domestic political problems 
in the postwar era (see Domestic Developments and Foreign Politics, 
1948-66, ch. 1; Political Dynamics, ch. 4). By the early 1950s, the 
patterns of postwar Finnish politics were established. No one group 
was dominant, but the ML under the leadership of Kekkonen, who 
became president in 1956, became an almost permanent govern- 
ing party until the late 1980s. In 1966 it changed its name to the 
Center Party (Keskustapuolue — Kesk) in an attempt to appeal to 
a broader segment of the electorate, but it still was not successful 
in penetrating southern coastal Finland. The SDP remained strong, 
but it was often riven by dissension. In addition, it had to share 
the socialist vote with the Communist Party of Finland (Suomen 
Kommunistinen Puolue — SKP). As a consequence, nonsocialist 
parties never had to face a united left. In the 1980s, the communists 
had severe problems adjusting to new social conditions, and they 
split into severad warring groups. As a result, their movement had 
a marginal position in Finnish politics. The SFP, a moderate cen- 
trist party with liberal and conservative wings, had a slighdy declin- 
ing number of seats in the Eduskunta, but its position in the middle 
of the political spectrum often made it indispensable for coalition 
governments. The National Coalition Party (Kansallinen Ko- 
koomuspuolue — KOK), rigidly conservative in the interwar period, 
gradually became more moderate and grew stronger, surpassing 
Kesk in the number of parliamentary seats in 1979. Excluded from 
a role in government for decades, possibly because it had been so 
right-wing earlier, the KOK participated in the government formed 
after the national elections of 1987, supplying the prime minister, 
Harri Holkeri. The Liberal Party of the postwar period was never 
strong, and it had a negligible role by the 1980s. 

A number of smaller parties, protest parties, and parties 
representing quite distinct groups filled out the list of about a dozen 
organizations that regularly vied for public office. Pensioners and 



XXX 



activist Christians each had their own party, and environmentalists 
won several seats in the 1983 and the 1987 national elections. The 
most active of the protest parties was the Finnish Rural Party (Suo- 
men Maaseudun Puolue — SMP), which managed to take votes 
from both Kesk and the socisdist groups. It scored its first big suc- 
cesses in the 1970 national elections. Since then its electoral results 
have varied considerably. By late 1980s, it seemed a spent force. 

After the 1966 national elections. President Kekkonen succeed- 
ed in forming a popular front coalition government that contained 
communists, socialists, and members of Kesk. Although this govern- 
ment lasted only two years and was succeeded for another decade 
by short-lived coalition and caretaker civil service governments, 
it was the beginning of what Finns call the politics of consensus 
(see Finland in the Era of Consensus, ch. 1). By the 1980s, con- 
sensus politics had become so dominant that some observers claimed 
that Finnish politics, long so bitter and contentious, had become 
the most boring in Western Europe. Although the larger parties 
differed on specific issues, and personal rivalries could be poisonous, 
there was broad agreement about domestic and foreign policy. The 
cabinet put in place after the 1983 elections, consisting mainly of 
social democrats and members of Kesk, completed its whole term 
of office, the first government to do so in the postwar period. 
Observers believed that the next government, formed in 1987 and 
composed mainly of conservatives and social democrats, would also 
serve out its term. 

A foundation of the politics of consensus was the success of the 
system of broad incomes agreements that has characterized Fin- 
land's employee-employer relations in recent decades. The first of 
these, the Liinamaa Agreement, dated from 1968. By the 1980s, 
the process was so regular as to seem institutionalized. With about 
80 percent of the work force as members, unions negotiated incomes 
agreements with employers' organizations (see Industrial Relations, 
ch. 3). The government often helped in the talks and subsequently 
proposed legislation embodying social welfare measures or finan- 
cial measures that underpinned the agreements. The process was 
successful at increasing labor peace in a country that had been 
racked by strikes for the first decades after World War II. Although 
there were complaints that the agreements bypassed political chan- 
nels or excluded minority opinion, the obvious prosperity they had 
helped bring about made the incomes policy system and the polit- 
ics of consensus highly popular. 

For much of its history, Finland had been a poor country, but 
in the postwar era it gradually became one of the world's most 
prosperous. At the end of the war, the country's economy faced 



xxxi 



serious hurdles. Although it was never occupied, Finland had 
suffered extensive material damage, especially in the north. The 
burden of reparations, to be paid in kind, meant that much rebuild- 
ing had to occur quickly and the economy had to be diversified 
(Industry, ch. 3). The Finns were successful, and by the early 1950s 
the country had an economy well poised to compete in the world 
market. Timber and timber products remained important, but a 
skillful selection of export objectives and the general high quality 
of its manufactures allowed Finnish products to penetrate the 
international economy at many points. Careful government fiscal 
policies and selected state supports combined with liberal trade poli- 
cies and financial deregulation to create an economy among the 
most capitalistic of Western Europe (see Role of Government, ch. 
3). In the 1980s, Finnish businessmen began to invest some of their 
profits abroad. Faced with the prospect of being closed out of the 
EC's single market, they bought into many firms located within 
the EC's member states. Finland's membership in EFTA, an 
important trading partner of the EC , also served to allay worries 
about the future of Finland's export trade (see Foreign Economic 
Relations, ch. 3). 

Finland's access to the Soviet Union's economy, through an 
arrangement whereby Finnish products were exchanged for raw 
materials, had for decades provided a fairly secure market for many 
of Finland's exports (see Finnish- Soviet Cooperation, ch. 3). By 
the late 1980s, trade with the Soviet Union was declining because 
of the long-term drop in the price of oil, but sophisticated joint 
venture agreements were being adopted to meet changed circum- 
stances. 

The economic transformation of Finland caused a social trans- 
formation as well. In 1950, approximately 40 percent of the work 
force was engaged in agricultural and forest work. By the 1980s, 
fewer than 10 percent were employed in this sector. Rather, the 
service sector became the largest single source of work (see 
Occupational and Wage Structure, ch. 2; Employment, ch. 3). As 
the country became wealthier, between 1950 and the 1980s, the 
number of persons retired or being educated increased dramati- 
cally and accounted for a significant portion of the population. An 
advanced economy required a skilled work force, and enrollment 
at the university level alone had quadrupled. 

A changing economy changed ways of life. Finns moved to areas 
where jobs were available, mainly to the south coastal region (see 
Internal Migration, ch. 2). This area saw a tremendous expan- 
sion, while other regions, most notably the central-eastern area, 
lost population. Finns call this movement of people from the 



xxxii 



countryside to the urbanized south the "Great Migration." It gave 
Finns improved hving conditions, but it caused much uprooting 
with predictable social effects: loss of traditional social ties, psy- 
chological disorders, and asocial behavior. Not all of the new set- 
tlements constructed in the south were as famed for their design 
as the garden town Tapiola in greater Helsinki (see Urbanization, 
ch. 2). 

The new prosperity was widely distributed, and people of all 
classes benefited from it. Labor was highly organized, and the broad 
incomes agreements involved nearly all of the working population. 
Those not in the active work force got a decent share of the coun- 
try's wealth via an extensive system of social welfare programs (see 
Public Welfare, ch. 2). Worries about health or old age were no 
longer pressing because government assistance was available for 
those who needed it. Some social measures deaJt with family wel- 
fare. Paid maternity leave lasted for nearly a year, and in the 1980s 
increasing resources were earmarked for childcare, as most mothers 
were employed outside the home. Finland's welfare system was 
based on the model developed in the other Nordic countries in which 
coverage was universal and was seen as a right, not as a privilege. 
Faced with special problems, and beginning with smaller means, 
Finland put its welfare system in place somewhat later than did 
the Scandinavian countries. By the late 1980s, however, it had 
become a member of that small community of nations that com- 
bined an extensive state welfare system with a highly competitive, 
privately owned market economy. 



August 7, 1989 Eric Solsten 



xxxiii 



Chapter 1. Historical Setting 




Fifteenth- century Olavinlinna Fortress in Savonlinna 



The signal achievement of Finland has been its 

survival against great odds — against a harsh dimate, physical and 
cultural isolation, and international dangers. Finland lies at higher 
latitudes than any other country in the world, and the punishing 
northern climate has complicated life there considerably. Geographi- 
cally, Finland is on the remote northern periphery, far from the 
mass of Europe, yet near two larger states, Sweden and Russia — 
later the Soviet Union, which have drawn it into innumerable wars 
and have dominated its development (see fig. 1). 

At the beginning of its recorded history, in the eleventh century 
A.D., Finland was conquered by its powerful neighbor, Sweden. 
Christianization and more than 600 years of Swedish rule (c. 
11 50- 1809) made the Finns an essentially West European people, 
integrated into the religion, culture, economics, and politics of 
European civilization. The Finns have, however, maintained their 
own language, which is complex and is not related to most other 
European languages. 

The centuries of Swedish rule witnessed Finland's increasing in- 
volvement in European politics, particularly when the country 
served as a battleground between Sweden on the west and Russia 
on the east. Over the centuries, Russia has exerted an especially 
persistent and powerful pressure on Finland. Many wars were 
fought between Swedes and Finns on the one side and Russians 
on the other. Eventually, Russia conquered Finland and incorpo- 
rated it into the Russian Empire, where it remained for more than 
a century, from 1809 to 1917. 

Until the nineteenth century, the Finns were, like many other 
peoples of Europe, a subject nation seemingly without a culture 
or a history of their own. The national awakening of the nineteenth 
century brought recognition of the uniqueness of the Finnish peo- 
ple and their culture, and led to Finland's independence in 1917. 
Complicating the emergence of the Finnish people into national 
consciousness, however, was the split between the majority of Fin- 
nish speakers and a powerful and influential minority of Swedish 
speakers. Only during the twentieth century was this conflict gradu- 
ally resolved. 

In 1987 Finland celebrated the seventieth anniversary of its na- 
tional independence, which was a hard- won achievement. Indepen- 
dence was threatened at the start by a bloody civil war in 1918 
between Finnish leftists (Reds) and rightists (Whites); a victory by 



3 



Finland: A Country Study 

the Reds might have resuhed in Finland's eventual absorption by 
the Soviet Union. One legacy of the war was a long-lasting politi- 
cal division between working-class Reds and middle-class Whites 
during the first two decades of independence. As a result, political 
extremism, as represented by communism and by fascism, was 
stronger in Finland than it was in many other Western democra- 
cies; it was eventually neutralized, however, and with time Fin- 
nish democracy became strongly rooted. 

The most serious challenges to Finland's independence came dur- 
ing World War II, when the Finns twice faced attack by overwhelm- 
ing Soviet forces. They fought heroically and were defeated both 
times, but the Soviets were narrowly prevented from occupying 
and absorbing Finland. Since World War II, the Soviet Union's 
status as a superpower has meant that it could at any time end Fin- 
land's existence as a separate state. Recognizing this, the Finns 
have sought and achieved reconciliation with the Soviets, and they 
have tenaciously pursued a policy of neutrality, avoiding entan- 
glement in superpower conflicts. 

The long era of peace after World War II made possible the blos- 
soming of Finland as a modern, industrialized, social- welfare 
democracy. By the 1980s, the intense social conflicts of previous 
decades were largely reconciled, and the country's relationships 
with other nations were apparendy stable. 

Origins of the Finns 

Present-day Finland became habitable in about 8,000 B.C., fol- 
lowing the northward retreat of the glaciers, and at about that time 
Neolithic peoples migrated into the country. According to the 
legends found in the Finnish folk epic, the Kalevala, those early 
inhabitants included the people of the mythical land Pohjola, against 
whom the Kalevada people — identified with the Finns — struggled; 
however, archaeological and linguistic evidence of the prehistory 
of the region is fragmentary. 

According to the traditional view of Finnish prehistory, ances- 
tors of the Finns migrated westward and northward from their 
ancestral home in the Volga River basin during the second millen- 
nium B.C., arriving on the southern shore of the Baltic Sea some 
time during the next millennium. According to this folk history, 
the early Finns began a migration from present-day Estonia into 
Finland in the first century A.D. and setded along the northern 
coast of the Gulf of Finland. Recent research, suggesting that the 
Finns arrived in the region at a much earlier date, perhaps by 3,000 
B.C., has questioned this traditional view, however (see fig. 2). 



4 



Historical Setting 



Both the traditional and modem theories agree that in referring 
to this prehistoric age one should not speak of a Finnish people, 
but rather of Finnic tribes that established themselves in present- 
day southern Finland, gradually expanded along the coast and 
inland, and eventually merged with one another, absorbing the 
indigenous population. Among those tribes were the Suomalaiset, 
who inhabited southwestern Finland and from whom was derived 
Suomi, the Finnish word for Finland. The Tavastians, another Fin- 
nic tribe, lived inland in southern Finland; the Karelians lived far- 
ther east in the area of the present-day Karelian Isthmus and Lake 
Ladoga. On the southern coast of the Gulf of Finland were the 
Estonians, who spoke a Finno-Ugric language closely related to 
Finnish. North of the Finns were the Lapps (or Sami), who also 
spoke a Finno-Ugric language, but who resisted assimilation with 
the Finns. 

Prehistoric Finnic peoples reached the Iron Age level of develop- 
ment, with social organization at the tribal stage. These Finnic tribes 
were threatened increasingly by the politically more advanced Scan- 
dinavian peoples to the west and the Slavic peoples to the east. 

The Era of Swedish Rule, c. 1150-1809 

During the Viking Age (c. A.D. 800-1050), Swedish Vikings 
came into contact with the Finns in the course of their expeditions 
eastward, which were aimed at establishing, via Russia, trade ties 
with the Arab world, although they built no permanent settlements 
in Finland. The Finns' name for the Swedes, Rus, was derived 
from the Finnish word for Sweden, Ruotsi, and is believed to be 
the origin of the name Russia. 

Swedish influence in Finland grew at approximately the close 
of the Viking Age, when the Swedes were converted to Christi- 
anity by the Roman Catholic Church and soon afterward began 
missionary activities in Finland. Most Finns were converted to the 
Roman Catholic Church by about the mid- twelfth century, dur- 
ing the wave of crusades that began in 1095. A quasi-historical 
legend maintains that in 1157 a crusade was led against the poly- 
theistic Finns by the Swedish King Erik IX and the English monk 
Henry, who had been appointed archbishop of Upps2da. Accord- 
ing to tradition, Henry was martyred in Finland and was subse- 
quently recognized as the country's patron saint. The success of 
the crusade was supposed to have given Sweden and Latin Chris- 
tianity a solid foothold in Finland. There is no evidence of the cru- 
sade and Henry's role in it, however, and there are indications 
that Christian communities existed in Finland at an earlier date. 



5 



Finland: A Country Study 




Historical Setting 



Meanwhile, the Russians, partly on religious grounds, also sought 
control of Finland. They had been converted to Eastern Orthodox 
Christianity and subsequently tried to convert the Finns to this 
religion. Finnic peoples in eastern Karelia were converted to 
Orthodoxy and were thereby drawn into a different religious and 
cultural orbit from Swedish-ruled, Roman Catholic Finns in the 
west. 

About 1240, Rome sanctioned two crusades in an effort to push 
the frontier of Latin Christianity eastward. Swedish crusaders first 
invaded Russia along the northern shore of the Gulf of Finland, 
but they were halted in 1240 on the banks of the Neva River by 
Prince Alexander of Novgorod, who thereby earned the name Alex- 
ander Nevsky ("of the Neva"). The second crusade, spearheaded 
by the Teutonic Knights, followed the southern shore of the Gulf 
of Finland and was defeated by Alexander Nevsky in 1242 on the 
ice of Lake Peipus. The Swedes initiated a final attempt to wrest 
eastern Karelia from the Russians in 1293, but the thirty years of 
war that followed failed to dislodge the Russians from the region. 
The Peace of Pahkinasaari (Swedish, Noteborg) in 1323, which 
ended this war, established the border between Finland and Rus- 
sia that wasmaintained for nearly three hundred years (see fig. 3). 

Sweden consolidated its control over Finland gradually, in a 
process that was facilitated by the introduction of Swedish settlers 
along the southern and the western coasts of Finland. The settlers, 
most of whom remained in the coastal region, became a ruling class 
within Finland, and Finland was politically integrated into the Swed- 
ish realm. 

Medieval Society and Economy 

The late medieval period was marked by the expansion of set- 
tlements along the coast and into the interior. The Finns gradual- 
ly conquered the wilderness to the north, moved into it, cleared 
the forest, and established agricultural communities. This settling 
of the wilderness caused conflict between the Finnish farmers and 
the Lapp reindeer herdsmen, forcing the Lapps slowly northward. 
By the end of the fifteenth century, the line of settlement was about 
200 kilometers north of the Gulf of Finland, and it ran along most 
of the coast of the Gulf of Bothnia, though less than 100 kilome- 
ters inland. The population of Finland likewise had grown slowly 
in this difficult environment; it numbered about 400,000 by the 
end of the Middle Ages. 

The economy of medieval Finland was based on agriculture, but 
the brevity of the growing season, coupled with the paucity of good 
soil, required that farming be supplemented by hunting, fishing, 



7 



Finland: A Country Study 




Source: Based on information from Eino Jutikkala and Kauko Pirinen, A History of Fin- 
land, New York, 1962, 23. 



Figure 3. Finland to 1617 



8 



Historical Setting 



trapping, and gathering. All but a small portion of the Finnish popu- 
lation earned their livelihood in this way. 

Although the European institution of serfdom never existed in 
Finland, and although most of the farmers were freemen, they had 
litde political power. Society and politics were dominated by a large- 
ly Swedish- speaking nobility. Finland was represented, however, 
in the Swedish Diet of the Four Estates (Riksdag) — clergy, nobili- 
ty, burghers, and farmers — that had advisory powers in relation 
to the king. The Finns also had some responsibility for matters of 
local justice and administration. 

Catholicism was deeply rooted in medieval Finnish society. The 
church parishes doubled as units of locad administration, and the 
church played the leading role in fostering an educated Finnish 
leadership and the development of the Finnish language. For 
example, the genereil requirement that parish priests use the 
indigenous languajge helped to maintain the speaking of Finnish. 
Turku (Swedish, Abo), encompassing the whole country, was the 
only diocese, and the bishop of Turku was the head of the Finnish 
church. In 1291 the first Finn was named bishop, and thereafter 
all incumbents were native-born. 

The southwestern seaport city of Turku, the seat of the bishopric, 
became the administrative capital of Finland. Turku was also the 
center of Finland's mercantile life, which was dominated by Ger- 
man merchants of the Hanseatic League. Finland's main exports 
at this time were various furs; the trade in naval stores was just 
beginning. The only other city of importance at this time was Vii- 
puri (Swedish, Vyborg), which was significant both as a Hanseatic 
trade center and as a military bastion that anchored Finland's 
eastern defenses against the Russians. 

The Kalmar Union 

Only once has Scandinavia been united politically, from 1397 
to 1523 under the Danish crown. The Kalmar Union came into 
existence essentially to allow the three Scandinavian states of Den- 
mark, Sweden, and Norway to present a united front against 
foreign — primarily German — encroachments. The driving force 
behind the union was Queen Margaret I of Denmark, who had 
gained the Norwegian crown by marriage and the Swedish crown 
by joining with the Swedish nobility against an unpopular Ger- 
man king. 

Under the Kalmar Union, monarchs sought to expand royal 
power, an attempt that brought them into conflict with the nobles. 
The union eventually came apart as a result of antagonisms between 
the Danish monarchy and the Swedish nobility, which controlled 



9 



Finland: A Country Study 



both Sweden and Finland. Frequent warfare marked Danish- 
Swedish relations during these years, and there was also fighting 
between factions competing for the Swedish crown. As a result of 
the turmoil, Finland suffered from heavy taxation, the disruption 
of commerce, and the effects of warfare carried out on its soil. 

The struggle between Denmark and Sweden diverted essential 
resources from Finland's eastern defenses and left them open to 
attack by the Muscovites. The late fifteenth century had witnessed 
the steady expansion of the power of the Grand Duchy of Muscovy, 
which was eventually to become the basis for the Russian Empire. 
In 1478 Grand Duke Ivan III subdued Novgorod and thus brought 
Muscovite power directly to the border of Finland. In 1493 Den- 
mark and Muscovy concluded a treaty of alliance aimed at embroil- 
ing Sweden in a two-front war, and in 1495 Muscovite forces 
invaded Finland. Although the fortress city of Viipuri held out, 
the Muscovites avoided the city, and, almost unchecked, devastated 
large areas of Finland's borderlands and interior. The Swedes made 
peace with Muscovy in 1497, and the borders of 1323 were 
reaffirmed, but the Swedish-Finnish nobility had to defend Fin- 
land without much direct assistance from Sweden. 

A revolt, against the Kalmar Union, under the leadership of a 
Swedish noble named Gustav Vasa resulted in 1523 in the crea- 
tion of a Swedish state separate from Denmark. Vasa became king 
of Sweden, as Gustav I Vasa, and he founded a dynasty that ruled 
Sweden-Finland for more than a century. He was genersiUy credited 
with establishing the modern Swedish state. Under his rule, Fin- 
land remained integrated with the Swedish state, and the Swedish- 
Finnish nobility retained its primacy over local affairs. 

The Reformation 

The Protestant Reformation that Martin Luther initiated in Ger- 
many in 1517 spread quickly to other countries. German merchants, 
students, and missionaries soon brought Lutheran doctrines to Scan- 
dinavia, where for centuries German influence had been strong, 
and where, moreover, there was some receptivity to the new doc- 
trines. By the time Luther died in 1546, Lutheranism was firmly 
implanted in the Scandinavian countries. Sweden- Finland converted 
to Lutheranism largely through the efforts of Gustav I Vasa, who 
acted mainly for political reasons, especially in order to strengthen 
the monarchy. The decisive break with Rome took place in 1527 
at the Riksdag held at Vasteras. This acceptance of Lutheranism 
enabled Gustav I Vasa, with the help of the aristocracy, to break 
the political power of the Roman Catholic Church, which had stood 
in the way of his desire for a stronger centralized state. The 



10 



Olavinlinna, the castle built at Savonlinna to defend Finland's 

eastern frontier against the Russians 
Courtesy Embassy of Finland, Washington 

confiscation of Church properties that accompanied the Reforma- 
tion also provided an enormous economic windfall for both the 
aristocracy and the monarchy. Before the Reformation, the Church 
had owned about one-fifth of the land in Sweden. 

In Finland there was little popular demand for the Reformation 
because more than 90 percent of the homesteads were owned by 
the farmers, and the Church, which owned less than 10 percent, 
used most of its income to support schools and charities. Luther- 
anism was instituted without serious opposition, nevertheless. In 
part, this was attributable to the gradual and cautious manner in 
which Lutherans replaced Roman Catholic doctrines while retaining 
many Catholic customs and practices. The Lutheran Church was 
not firmly established finally until 1598, when the last Catholic king 
of Sweden- Finland, Sigismund, was driven from the throne. 

The outstanding ecclesiastical figure of the Reformation in Fin- 
land was Mikael Agricola (1506-57), who exerted a great 
influence on the subsequent development of the country. Agri- 
cola had studied under Luther at Wittenberg, and, recognizing 
the centrality of the Bible in the Reformation, he undertook to trans- 
late the Bible into Finnish. Agricola' s translation of the New Testa- 
ment was published in 1548. He wrote other religious works and 
translated parts of the Old Testament as well. Because Finnish had 



11 



Finland: A Country Study 



not appeared previously in print, Agricola is regarded as the father 
of the Finnish literary language. After 1554 he served as the bishop 
of Turku, the highest office of the Finnish church. 

The Reformation brought two educational benefits to Finland. 
Its emphasis on religious instruction in the vernacular languages 
supported an increase in literacy, especially after the Ecclesiasti- 
cal Law of 1686 had confirmed royal control over the Lutheran 
Church of Sweden- Finland and had charged it with teaching the 
catechism to each church member. Another benefit of the Refor- 
mation was the founding of Abo Academy in 1640 to provide the- 
ological training for Finnish clergymen. Abo Academy was the 
precursor of the University of Helsinki, which later became the 
center of higher education in Finland and the focus of Finland's 
cultural life. 

Finland and the Swedish Empire 

During his reign, Gustav I Vasa concentrated on consolidating 
royal power in the dynasty that he had founded and on furthering 
the aims of the Reformation. In the process, he molded Sweden 
into a great power, but he wisely avoided involvement in foreign 
wars. His successors, however, sought, through an aggressive for- 
eign policy, to expand Sweden's power in the Baltic area. This poli- 
cy produced some ephemeral successes, and it led to the creation 
of a Swedish empire on the eastern and the southern shores of the 
Baltic Sea (see fig. 4; table 2, Appendix A). 

Beginning in the mid-sixteenth century, Sweden's ambitious for- 
eign policy brought it into conflict with the three other main pow- 
ers that had an interest in the Baltic: Denmark, Poland, and Russia. 
These three powers fought numerous wairs with Sweden, which was 
at war for more than 80 of the last 300 years it ruled Finland. Fin- 
land itself was often the scene of military campaigns that were gener- 
ally conducted as total war and thus included the devastation of 
the countryside and the killing of civilians. One example of such 
campaigns was the war between Sweden and Russia that lasted 
from 1570 to 1595 and was known in Finland as the Long Wrath, 
because of the devastations inflicted on the country. Sweden was 
also heavily involved in the Thirty Years' War (1618-48), in which 
the Swedes under King Gustavus II Adolphus thwarted the 
advance of the Habsburg Empire to the shores of the Baltic and 
thereby secured the Swedish possessions there. Finnish troops were 
conscripted in great numbers into the Swedish army to fight in this 
or in other wars, and the Finns often distinguished themselves on 
the batdefield. 

The Great Northern W2ir began in 1 700 when Denmark, Poland, 



12 



Historical Setting 



and Russia formed an alliance to take advantage of Sweden's 
apparent weakness at that time and to partition the Swedish empire. 
Sweden's youthful king Charles XII surprised them, however, with 
a series of military victories that knocked Denmark out of the war 
in 1700 and Poland, in 1706. The impetuous Swedish king then 
marched on Moscow, but he met disaster at the battle of Poltava 
in 1709. As a result, Denmark and Poland rejoined the war against 
Sweden. Charles attempted to compensate for Sweden's territo- 
rial losses in the Baltic by conquering Norway, but he was killed 
in action there in 1718. His death removed the main obstacle to 
a negotiated peace between Sweden and the alliance. 

The Great Northern War ended on August 30, 1721, with the 
signing of the Peace of Uusikaupunki (Swedish, Nystad), by which 
Sweden ceded most of its territories on the southern and the eastern 
shores of the Baltic Sea. Sweden was also forced to pay a large 
indemnity to Russia, and, in return, the Russians evacuated Fin- 
land, retaining only some territory along Finland's southeastern 
border. This area included the fortress city of Viipuri. As a result 
of the war, Sweden's power was much reduced, and Russia replaced 
Sweden as the main power in the Baltic. 

Finland's ability to defend itself had been impaired by the famine 
of 1 696 in which about one-third of the Finnish people died of star- 
vation, a toll greater than that caused by the Black Death in the 
fourteenth century. The war's greatest impact on Finland, beyond 
the heavy taxes and conscription, was caused by Russian occupa- 
tion from 1714 to 1722, a period of great difficulty, remembered 
by the Finns as the Great Wrath. The hardships of being conquered 
by a foreign invader were compounded by Charles XII's insistence 
that the Finns carry on partisan warfare against the Russians. Much 
of the countryside was devastated by the Russians in order to deny 
Finland's resources to Sweden. Of the nearly 60,000 Finns who 
served in the Swedish army, only about 10,000 survived the Great 
Northern War. Finland's prewar population of 400,000 was reduced 
by the end of the war to about 330,000. 

Charles XII's policies led to the repudiation of absolute monar- 
chy in Sweden and to the ushering in of a half-century of parliamen- 
tary supremacy, referred to as the Age of Freedom. One major 
characteristic of this era was the strife between the two major poli- 
tical parties, the Hats, representing the upper classes, and the Caps, 
representing the lower classes. These political parties, however, 
proved no more competent in the realm of foreign affairs than the 
kings. In 1741 the Hats led Sweden into a war with Russia in order 
to try to undo the result of the Peace of Uusikaupunki. Russian 
forces thereupon invaded Finland and began, virtually without a 



13 



Finland: A Country Study 




100 K ilometers 
100 Miles 



Source: Based on information from William R. Shepherd, Historical Atlas, 7th ed., New 
York, 1929, 120. 



Figure 4. Sweden-Finland, Sixteenth to Eighteenth Centuries 



14 



Historical Setting 



fight, a short-lived occupation known as the Lesser Wrath. In 
accordance with the Peace of Turku signed in 1743, Russia once 
again evacuated Finland, but took another slice of Finnish territory 
along the southeastern frontier. 

King Gustav III, who in 1772 had reimposed absolutism in 
Sweden, also tried to alter the verdict of the Great Northern War. 
In 1788 Sweden declared war against Russia with the intention 
of regaining territory along Finland's eastern frontier. A signifi- 
cant incident during that war was the mutiny of a group of Fin- 
nish military officers, the Anjala League, the members of which 
hoped to avert Russian revenge against Finland. A leading figure 
in the mutiny was a former colonel in the Swedish army, Goran 
Sprengtporten. Most Finnish officers did not support the mutiny, 
which was promptly put down, but an increasing number of Finns, 
especially Finnish nobles, were weary of Finland's serving as a bat- 
deground between Sweden and Russia. Because of Russia's simul- 
taneous involvement in a war with the Ottoman Empire, Sweden 
was able to secure a settlement in 1790 in the Treaty of Varala, 
which ended the war without altering Finland's boundaries. 

Sweden's frequent wars were expensive, 2ind they led to increased 
taxation, among other measures for augmenting state revenues. 
A system of government controls on the economy, or mercantilism, 
was imposed on both Sweden and Finland, whereby the Finnish 
economy was exploited for the benefit of Sweden. In addition to 
hindering Finland's economic development, Sweden's wars ena- 
bled Swedish aristocrats and military officers to gain large estates 
in Finland as a reward for their services. The Swedish-speaking 
minority dominated landholding, government, and the military. 
Although free of serfdom, peasants paid high taxes, and they had 
to perform labor for the government. Through the provincial 
assemblies, the peasants retained a small measure of political power, 
but the Swedish-speaking nobility held most political and economic 
power in Finland. 

Throughout this period, the peasantry continued to be the back- 
bone of Finland's predominandy agrarian society. The frontier was 
pushed northward as new stretches of inland wilderness were set- 
tled. The potato was introduced into Finnish agriculture in the 
1730s, and it helped to ensure a stable food supply. Although 
Finland's trade in naval stores — timber, tar, pitch, resin — was 
expanded considerably, the growth of an indigenous Finnish mid- 
dle class was retarded by the continuing dominance of foreign mer- 
chants, especially the Germans and the Dutch. 

The centuries-old union between Sweden and Finland came to 
an end during the Napoleonic wars. France and Russia became 



15 



Finland: A Country Study 

allies in 1807 at Tilsit, and Napoleon subsequently urged Russia 
to force Sweden into joining them against Britain. Tsar Alexander 
I obliged by invading Finland in 1808, and, after overwhelming 
Sweden's poorly-organized defenses, he conquered Finland in 1809. 
Sweden formally ceded Finland to Russia by the Treaty of Hami- 
na (Swedish, Fredrikshamn) on September 17, 1809. 

The Russian Grand Duchy of Finland, 1809-1917 

Russia planned at first to annex Finland directly as a province 
of the Russian Empire, but in order to overcome the Finns' mis- 
givings about Russian rule, Tsar Alexander I offered them the fol- 
lowing solution. Finland was not annexed to the Russian Empire 
but was joined to Russia instead through the person of the tsar. 
In addition, Finland was made an autonomous state — the Grand 
Duchy of Finland — v^th its inherited traditions intact. Thus the 
laws and constitution of Finland remained unchanged, and the tsar 
took the place of the Swedish king as sovereign. The officiad forms 
of government inherited from the era of Swedish absolutism were 
sufficiently autocratic to allow the tsar to accept them largely intact; 
however, included in these forms of government was the compre- 
hensive law code of 1734 that protected individual rights. Imperial 
assurances that Finland would be autonomous and that its tradi- 
tions would be respected were encoded in two 1809 decrees that 
constituted for the Finns the basis of their relationship with Rus- 
sia. The Finnish Diet that met at Porvoo (Swedish, Borga) in 1809 
seconded the tsar's decrees. As a further gesture of magnanimity, 
in 1812 the tsar restored to Finland the lands Russia had annexed 
in the eighteenth century. These conciliatory measures were ef- 
fective, and, as long as Russia respected this arrangement, the Finns 
proved to be loycd subjects of the Russian Empire (see fig. 5). 

According to the terms of the agreement reached between the 
Diet and the tsar, the government of Finland was direcdy controlled 
by the tsar, who appointed a governor general as his adviser. With 
one brief exception, all of the governors general were Russian. The 
first governor general was the Swedish-Finn Goran Sprengtpor- 
ten, who was ably assisted by the prominent Swedish-Finn politi- 
cian, Gustaf Mauritz Armfelt. The chief instrument of government 
in the grand duchy was the Government Council, renamed in 1816 
the Senate, which was composed of fourteen Finns appointed by 
the tsar. The counterpart of the Senate in St. Petersburg was the 
Committee for Finni^ Affairs, composed of Finns, which presented 
Finnish requests to the tsar; however, Finnish civil servants usually 
carried on the business of government with little interference from 
the tsarist government in St. Petersburg. The Diet was formally 



16 



Historical Setting 



the lawmaking body of the government; it could not initiate legis- 
lation, however, but could only petition the tsar to introduce legis- 
lation. The tsar, moreover, could summon and could dismiss the 
Senate without reference to the Diet. There was an independent 
judicicd system. Finland even maintained its own customs system, 
and taxes collected in Finland remained in the country. Finns were 
exempted from conscription into the Russian army. 

Despite these safeguards, Finland still felt the autocracy of the 
tsar. The Finnish Diet was dismissed in 1809, and it was not recon- 
vened for more than fifty years. Although the government of the 
grand duchy represented an uneasy balance between the traditions 
of Finnish self-government and those of Russian autocracy, as long 
as the Russians respected the balance, the Finnish people were satis- 
fied. The period of Russian rule was characterized by peaceful 
internal development, largely because, for the first time in centu- 
ries, Finland was free of war. 

The Rise of Finnish Nationalism 

The eighteenth century had witnessed the appearance of 
embryonic Finnish nationalism. Originating as an academic move- 
ment, it incorporated the study of linguistics, folklore, and history, 
which helped to establish a sense of national identity for the Fin- 
nish people. The leading figure of this movement was professor 
Henrik Gabriel Porthan of the University of Turku. The work of 
Porthan and others was an expression of the Finns' growing doubts 
about Swedish rule, and it prefigured the rise of Finnish national- 
ism in the nineteenth century. 

In the nineteenth century, Finland witnessed the rise of not one 
but two national movements: Finnish-language nationalism and 
Swedish-language nationalism. The creation of the independent 
Finnish state in the twentieth century was made possible in large 
part by these nationalist movements. 

Finnish-language nationEilism arose in the nineteenth century, 
in part as a reaction against the dominance of the Swedish lan- 
guage in Finland's cultural and political life. The ethnic self- 
consciousness of Finnish speakers was given a considerable boost 
by the Russian conquest of Finland in 1809, because ending the 
connection with Sweden forced Finns to define themselves with 
respect to the Russians. At first the Russian government generally 
supported Finnish linguistic nationadism, seeing it as a way to 
alienate the Finns from Sweden and thereby to preclude any move- 
ment toward reintegration. For the same reason, the Russians in 
1812 moved the capital of Finland from Turku to Helsinki, bring- 
ing it closer to St. Petersburg. Similarly, after a catastrophic fire 



17 



Finland: A Country Study 




Source: Based on information from Hugh Seton-Watson, The Russian Empire 1801-1917, 
Oxford, 1967, 774 



Figured. Grand Duchy of Finland, 1809-1917 



18 



Historical Setting 



in Turku, the University of Turku was moved to Helsinki in 1827. 
The University of Helsinki soon became the center of the Finnish 
nationalist movement. Finnish-language nationalism, or the Fen- 
noman movement, became the most powerful political force in 
nineteenth-century Finland. A famous phrase of uncertain origin 
that was coined in the early nineteenth century summed up Fin- 
nish feelings as follows: "We are no longer Swedes; we cannot 
become Russians; we must be Finns." 

The leading Finnish nationalist spokesman was Johan Vilhelm 
Snellman (1806-81), who saw increasing the use of the Finnish lan- 
guage as a way for Finland to avoid assimilation by Russia. 
Snellman stressed the importance of literature in fostering national 
consciousness; until the nineteenth century, however, there had 
been almost nothing published in Finnish except for religious works. 
The publication in 1835 of the Kalevala, the Finnish folk epic, filled 
the void, and in the late twentieth century the Kalevala continued 
to be the single most important work of Finnish literature. Its author 
was a country doctor named Elias Lonnrot, who, while practicing 
medicine along Finland's eastern border, compiled hundreds of folk 
ballads that he wove together into an epic poem of nearly 23,000 
lines. In the years following the publication of the Kalevala, numer- 
ous other works of Finnish literature were published. Of special 
importance was the work of the Swedish-language poet Johan Lud- 
vig Runeberg (1804-77), who authored a collection of poems called 
The Tales of Ensign Stdl. The first poem of the cycle, called "Our 
Land," was soon set to music, and it became the national anthem 
of Finland. 

The growth of the militant and increasingly powerful Fennoman 
movement threatened the traditional dominance of the Swedish 
speakers in Finland, who reacted by forming a Swedish- speaking 
nationalist countermovement, the Svecoman movement. The main 
idea of the Svecomans was that the Swedish- speakers of Finland 
were a separate nation from the Finnish- speakers and needed to 
preserve their Swedish language and culture. The Svecomans 
became a small but powerful political movement that won the back- 
ing of much of the Swedish- speaking community in Finland. 

A third political faction at this time was the short-lived Liberal 
Party. This party sought to obtain reforms for Finland, especially 
freedom of the press, greater self-government, and increased eco- 
nomic freedom. It was split, however, by the growing language 
controversy, and most of its members were absorbed into either 
the Fennomans or the Svecomans. 

Emerging as a debate among educated Finns, the nationalist 
movement reached ever wider circles of the Finnish people in 



19 



Finland: A Country Study 

succeeding decades in the nineteenth century. Major breakthroughs 
for the Finnish-language movement were made possible by Rus- 
sia's humiliating defeat in the Crimean War (1853-56), which 
opened up an era of reform in Russia. For example, in 1858 Fin- 
nish was established as the language of local self-government in 
those administrative districts where it was spoken by the majority 
of the inhabitants. 

When Poland revolted in 1863, the Finns remained at peace, 
and the Russian government showed its gratitude by granting the 
Finns two major imperial edicts. The first summoned the Finnish 
Diet for the first time since 1809, an event that had long-term reper- 
cussions. The Diet enacted legislation establishing a separate Fin- 
nish monetary system and creating a separate Finnish army. The 
subsequent regular meetings of the Diet gave the Finns valuable 
experience in parliamentary politics. The second edict of 1863 was 
the Language Ordinance, which over a period of twenty years gave 
the Finnish language a status equal to that of Swedish in official 
business. Although Swedish speakers found ways of blocking the 
full implementation of the Language Ordinamce, it still made pos- 
sible a vast expansion of the Finnish language school system. Ulti- 
mately, the Language Ordinance led to the creation of an educated 
class of Finnish speakers, who provided articulate mass support 
for the nationalist cause. 

Social and Economic Developments 

Over the centuries, Finland underwent various political changes, 
but its society and economy remained fairly static. At the begin- 
ning of the nineteenth century, Finland was a predominandy agrar- 
ian country; about 90 percent of its population was engaged in 
farming. The scourges of war and famine had kept down the popu- 
lation, which in 1810 numbered somewhat under 900,000, only 
about 5 percent of which lived in cities. 

Except for some copper, Finland was without important miner- 
al deposits. During the nineteenth century, its sole natural resource 
was timber, and this became to be the basis on which industriali- 
zation was launched. By the mid-nineteenth century, wood was 
beginning to be in short supply in Central Europe and in Western 
Europe, but at the same time it was needed in unprecedented quan- 
tities for railroad ties, mineshaft supports, construction, and paper 
production. Finland thus found a ready and expanding market for 
its wood. 

The development of the lumber industry was retarded for a time, 
however, by the lack of a modern economic infrastructure. Into 
the breach stepped the Finnish government, which promulgated 



20 



Historical Setting 



a number of measures aimed at creating the needed infrastructure. 
Railroads and inland waterways were developed, beginning in the 
1850s and the 1860s, to connect the interior of the country with 
the coast; and harbor facilities were built that, through merchant 
shipping, connected Finland with the rest of the world. In addi- 
tion, the Bank of Finland and the monetary system were reor- 
ganized, antiquated laws restricting economic activity were 
repealed, and tariff duties on many items were reduced or were 
abolished; thus, the Finnish government promoted industrializa- 
tion and general progress in Finland. 

The 1860s and the 1870s witnessed a tremendous boom in the 
Finnish lumber industry, which put Finland on the road to indus- 
trialization. Between then and 1914, the lumber industry spawned 
a number of associated industries for the production of wood pulp, 
paper, matches, cellulose, and plywood. The profits eaimed in these 
industries led in turn to the creation of numerous other enterprises 
that produced, among other things, textiles, cement, and meted 
products. Finland's leading trading partner by 1910 was Germany, 
followed by Russia and Britain. The trade in lumber products also 
stimulated the rise of a relatively large and modern Finnish mer- 
chant marine, which, after 1900, carried about half of Finland's 
foreign trade. Meanwhile, however, the steady conversion of mer- 
chant shipping from wooden-hulled sailing ships to iron-hulled and 
steel-hulled steamships curtailed Finland's traditional export of 
naval stores. 

The growth of industry was accompanied by the emergence of 
an urban working class. As in early industrialization elsewhere, 
the living and working conditions of the new industrial laborers 
were poor, and these laborers sought to improve their situation 
through trade unions. Trade unions were legalized in 1883, and 
soon a number of them were established, including, in 1907, a 
national trade union organization, the Finnish Trade Union Fed- 
eration (Suomen Ammattijarjesto — SAJ). Workers founded a 
political party in 1899 to represent them in the Diet, and in 1903 
it was renamed the Finnish Social Democratic Party (Suomen 
Sosialidemokraattinen Puolue — SDP). By the elections of 1907, the 
SDP was already the largest single party in politics. Both the SAJ 
and the SDP were heavily influenced by their counterparts in Ger- 
many, and, as a consequence, their doctrines had a pronounced 
Marxist character. The SDP grew even more radical, in part 
because of the resistance of the middle-class parties to virtually all 
aspects of social reform, but also because of its strict adherence 
to the Marxist dogma of class conflict. One example of its radical- 
ism was its persistent unwillingness to cooperate with any of the 



21 



Finland: A Country Study 



other political parties. Another was its program, which began in 
1911 to change from upholding the right of farmers to own their 
own land to demanding that land be nationalized — a change that 
cost the SDP most of its support among agricultural laborers. 

In spite of industrialization, Finland in the early twentieth cen- 
tury was still predominantly an agrarian state. Agriculture also had 
undergone modernization, however, a process that had had a sig- 
nificant impact on Finland. The introduction of the potato in the 
eighteenth century had significantly reduced the threat of famine; 
the gradual introduction of scientific agricultural techniques dur- 
ing the nineteenth century had brought about further increases in 
productivity. 

The ultimate consequence of this increased agricultural produc- 
tivity was a significant increase of the population from 865,000 in 
1810 to 2,950,000 in 1910. Some of this surplus rural population 
was absorbed by the growing urban factory centers, but the rest 
of these people were forced to stay on the land. Because the amount 
of arable land in Finland was limited, about two-thirds or more 
of the agricultural population was relegated to the status of tenant 
farmers and landless agricultural laborers. These people's lives were 
precarious because of their large numbers and their dependence 
on the vagaries of the harvests. The tsarist government did little 
on their behalf, and the Diet, which was dominated by middle- 
class interests, showed no great concern for them. As a result, from 
about 1870 to 1920, approximately 380,000 people left Finland, 
more than 90 percent of them for the United States. Of those re- 
maining in Finland, many were initially attracted by the SDP, until 
its pronounced atheistic outlook and its aim of nationalizing land 
alienated them. A program of land reform, begun after indepen- 
dence, eventually integrated these agricultural laborers into the Fin- 
nish economy. 

One expression of popular discontent with the status quo dur- 
ing the nineteenth century was the rise of religious movements that 
challenged the formalistic and rationalistic Lutheran state church. 
Of special significance was the Pietist movement, in which the 
farmer-evangelist Paavo Ruotsalainen (1777-1852) was the most 
important figure (see Lutheran Church of Finland, ch. 2). The 
Pietists popularized the notion of personal religion, an idea that 
appealed to the agrarian population. Pietism eventually had much 
influence within the Lutheran Church of Finland; it was also in- 
fluential among Finnish emigrants to the United States, where, 
among other things, it provided an effective counterweight to Fin- 
nish political radicalism. 



22 



Historical Setting 



The Era of Russification 

The Russian Empire in the late nineteenth century faced a num- 
ber of seemingly intractable problems associated with its general 
backwardness. At the same time, ethnocentric, authoritarian Rus- 
sian nationalism was on the rise, as manifested both in an aggres- 
sive foreign policy and in a growing intolerance of non-Russian 
minorities within the empire. The Russian government began 
implementing a program of Russification that included the impo- 
sition of the Russian language in schools and in governmental 
administration. The goal of these measures was to bring non- 
Russian peoples into the Russian cultural sphere and under more 
direct political control. Poles bore the brunt of the Russification 
policies, but eventually other non-Russian peoples also began to 
feel its pressure. 

Russian nationalists considered the autonomous state of Finland 
an anomcdy in an empire that strove to be a unified autocratic state; 
furthermore, by the 1890s Russian nationalists had several rea- 
sons to favor the Russification of Finland. First, continued suspi- 
cions about Finnish separatism gained plausibility with the rise of 
Finnish nationalism. Second, Finnish commercial competition 
began in the 1880s. Third, Russia feared that Germany might 
capitalize on its considerable influence in Sweden to use Finland 
as a staging base for an invasion of Russia. The Russian govern- 
ment was concerned especially for the security of St. Petersburg. 
Fourth, there was a growing desire that the Finns, who enjoyed 
the protection of the Russian Empire, should contribute to that 
protection by allowing the conscription of Finnish youths into the 
Russian army. These military considerations were decisive in lead- 
ing the tsarist government to implement Russification, and it was 
a Russian military officer, Nikolai Ivanovich Bobrikov, who, in 
October 1898, became the new governor general and the eventual 
instrument of the policy. 

The first major measure of Russification was the February 
Manifesto of 1899, an imperial decree that asserted the right of 
the tsarist government to rule Finland without consulting either 
the Finnish Senate or the Diet. This decree relegated Finland to 
the status of the other provinces of the Russian Empire, and it 
cleared the way for further Russification. The response of the Finns 
was swift and overwhelming. Protest petitions circulated rapidly 
throughout Finland, and they gathered more than 500,000 signa- 
tures. In March 1899, these petitions were collected, and they were 
submitted to the tsar, who chose to ignore this so-called Great 
Address. The February Manifesto was followed by the Language 



23 



Finland: A Country Study 

Manifesto of 1900, which was aimed at making Russian the main 
administrative language in government offices. 

In spite of the impressive show of unity displayed in the Great 
Address, the Finns were divided over how to respond to Russifi- 
cation. Those most opposed to Russification were the Constitu- 
tionalists, who stressed their adherence to Finland's traditional 
system of government and their desire to have it respected by the 
Russian government. The Constitutionalists formed a political front 
that included a group of Finnish speakers, called the Young Finns, 
and most Swedish speakers. Another party of Finnish speakers, 
called the Old Finns, represented those who were tempted to com- 
ply with Russification, partly out of a recognition of their own 
powerlessness and partly out of a desire to use the Russians to 
undermine the influence of Swedish speakers in Finland. These 
Finns were also called Compliants, but by 1910 the increasingly 
unreasonable demands of the tsarist government showed their 
position to be untenable. The SDP favored the Constitutionalists, 
insolar as it favored any middle-class party. 

The measure that transformed Finnish resistance into a mass 
movement was the new conscription law promulgated by the tsar 
in July 1901. On the basis of the February Manifesto, the tsar 
enacted a law for Finl2ind that dramatically aJtered the nature of 
the Finnish army. Established originally as an independent army 
with the sole mission of defending Finland, the Finnish army was 
now incorporated into the Russian army and was made available 
for action anywhere. Again the Finns responded with a massive 
petition containing about half a million signatures, and again it 
was ignored by the tsar; however, this time the Finns did not let 
matters rest with a petition, but rather followed it up with a cam- 
paign of passive resistance. Finnish men eligible for conscription 
were first called up under the new law in 1902, but they responded 
with the so-called Army Strike — only about half of them reported 
for duty. The proportion of eligible Finns complying with the draft 
rose in 1903, however, from about half to two- thirds and, in 1904, 
to about four-fifths. The high incidence of non-compliance neverthe- 
less convinced the Russian military command that the Finns were 
unreliable for military purposes, and, as a consequence, the Finns 
were released from military service in return for the levy of an extra 
tax, which they were to pay to the imperial government. 

The Finns' victory in the matter of conscription was not achieved 
until the revolution of 1905 in Russia. In the meantime, the Rus- 
sian government had resorted to repressive measures against the 
Finns. They had purged the Finnish civil service of opponents of 
Russification; they had expanded censorship; and, in April 1903, 



24 



Historical Setting 



they had granted dictatorial powers to Governor General Bobrikov. 
These years also witnessed the growth of an active aind conspiratorial 
resistance to Russification, called the Kagal after a similar Jewish 
resistamce orgeinization in Russia. In June 1904, the active resistance 
succeeded in assassinating Bobrikov, and his death brought a les- 
sening of the pressure on Finland. 

The first era of Russification came to an end with the outbreak 
of revolution in Russia. The general strike that beg2in in Russia 
in October 1905 spread quickly to Finland cind led there, as in Rus- 
sia, to the assumption of most real power by the local strike com- 
mittees. As in Russia, the revolutionary situation was defused 
quickly by the sweeping reforms promised in the tscir's October 
Manifesto, which for the Finns suspended, but did not rescind, 
the February Manifesto, the conscription law, and Bobrikov's dic- 
tatori2il measures. 

In 1906, the tsar proposed that the antiquated Finnish Diet be 
replaced by a modern, unicameral parliament. The Finns accepted 
the proposal, and the Eduskunta was created. Also included in the 
tsar's proposal was the provision that the parliament be elected by 
universal suffrage, a plan that the Finns accepted, thanks to the 
spirit of national solidarity they had gained through the struggle 
against Russification. The number of eligible voters was increased 
thereby from 125,000 to 1,125,000, and Finland became the second 
country, after New Zealand, to allow women to vote. When the 
new parliament met in 1907, the SDP was the largest single party, 
with 80 of 200 seats. 

Partly out of frustration that the revolution of 1905 had not 
accomplished more, the Finnish SDP became increasingly radi- 
cal. Foreshadowing the civil war, the short-lived revolutionary peri- 
od also brought about, in 1906, the first armed clash between the 
private armies of the workers (Red Guard) and the middle classes 
(Civil Guard or White Guard). Thus the Finns were increasingly 
united in their opposition to Russification, but they were split on 
other major issues. 

By 1908 the Russian government had recovered its confidence 
sufficiently to resume the program of Russification, and in 1910 
Russian prime minister Pyotr Stolypin easily persuaded the Rus- 
sian parliament, the Duma, to pass a law that ended most aspects 
of Finnish autonomy. By 1914 the Finnish constitution had been 
greatly weakened, and Finland was ruled from St. Petersburg as 
a subject province of the empire. 

The outbreak of World War I had no immediate effects on Fin- 
land because Finns — except for a number of Finnish officers in the 
Russian army — did not fight in it, and Finland itself was 



25 



Finland: A Country Study 



not the scene of fighting. Finland suffered from the war in a variety 
of ways, nevertheless. Cut off from overseas markets, Finland's 
primary industry — lumber — experienced a severe decline, with 
layoffs of many workers. Some of the unemployed were absorbed 
by increased production in the metal-working industry, and others 
found work constructing fortifications in Finland. By 1917 short- 
ages of food had become a major problem, contributing further 
to the distress of Finnish workers. In addition, sizable contingents 
of the Russian army and navy were stationed in Finland. These 
forces were intended to prevent a German incursion through Fin- 
land, and by 1917 they numbered more than 100,000 men. The 
Finns disliked having so many Russians in their country, and all 
of this discontent played into the hands of the SDP, the main op- 
position party, which in the 1916 parliamentary elections won 103 
of 200 seats in the Eduskunta — an absolute majority. 

There were no longer any doubts about Russia's long-term 
objectives for Finland after November 1914, when the Finnish press 
published the Russian government's secret program for the com- 
plete Russification of Finland. Germany appeared as the only power 
capable of helping Finland, and many Finns thus hoped that Ger- 
many would win the war, seeing in Russia's defeat the best means 
of obtaining independence. The German leadership, for its part, 
hoped to further its war effort against Russia by aiding the Finns. 
In 1915, about 2,000 young Finns began receiving military train- 
ing in Germany. Organized in a jaeger (light infantry) battalion, 
these Finns saw action on the eastern front. 

By 1917, despite the divisions among the Finns, there was an 
emerging unanimity that Finland must achieve its independence 
from Russia. Then in March 1917, revolution broke out in Rus- 
sia, the tsar abdicated, and within a few days the revolution spread 
to Finland. The tsarist regime had been discredited by its failures 
and had been toppled by revolutionary means, but it was not yet 
clear what would t2ike its place. 

Independence and the Interwar Era, 1917-39 

More than a century of Russian rule in Finland ended in 1917. 
The Finns, however, experienced no easy transition to indepen- 
dence, but rather endured a bloody civil war between their own 
leftist Reds and rightist Whites. Finally, a leftist takeover was 
averted; Finland's independence was secured; and a parliamen- 
tary democracy emerged (see fig. 6). 

The Finnish Civil War 

The Revolution that was underway in Russia by March 8, 1917, 



26 



Historical Setting 



spread to Helsinki on March 16, when the Russian fleet in Hel- 
sinki mutinied. The Provisional Government promulgated the 
so-called March Manifesto, which cancelled all previous uncon- 
stitutional legislation of the tsarist government regarding Finland. 
The Finns overwhelmingly favored independence, but the Provi- 
sional Government granted them neither independence nor any 
real political power, except in the realm of administration. As during 
the Revolution of 1905, most actual power in Finland was wielded 
by the local strike committees, of which there were usually two: 
one, middle-class; the other, working-class. Also as before, each 
of the two factions in Finnish society had its own private army: 
the middle class, the Civil Guard; and the workers, the Red Guard. 
The disintegration of the normal organs of administration and 
order, especially the police, and their replacement by local strike 
committees and militias unsettled society and led to a growing sense 
of unease. 

Contention among political factions grew. The SDP first sought 
to use its parliamentary majority to increase its power at the expense 
of the Provisional Government. In July 1917, it passed the so-called 
Power Act, which made the legislature supreme in Finland, and 
which reserved only matters of foreign affairs and defense for the 
Provisional Government. The latter thereupon dissolved the Fin- 
nish parliament and called for new elections. The campaign for 
these new elections was bitterly fought between the socialists and 
the nonsocialists. Violence between elements of the middle class 
and the working class escalated at this time, and murders were com- 
mitted by both sides. The nonsocialists won in the election, reduc- 
ing the socialist contingent in the parliament to 92 of 200 seats, 
below the threshold of an absolute majority. 

Meanwhile, the socialists were becoming disillusioned with 
parliamentary politics. Their general failure to accomplish anything, 
using parliamentary action, from 1907 to 1917 contrasted strongly 
with their successes in the 1905 to 1906 period, using direct action. 
By autumn 1917, the trend in the SDP was for the rejection of 
parliamentary means in favor of revolutionary action. The high 
unemployment and the serious food shortages suffered, in partic- 
ular, by the Finnish urban workers accelerated the growth of revolu- 
tionary fervor. The SDP proposed a comprehensive program of 
social reform, known as the We Demand {Me vaadimme) in late 
October 1917, but it was rejected by parliament, now controlled 
by the middle class. Acts of politiccil violence then became more 
frequent. Finnish society was gradually dividing into two camps, 
both armed, and both intent on total victory. 

The Bolshevik takeover in Russia in November 1917 heightened 



27 



Finland: A Country Study 




Source: Based on information from Eino Jutikkala and Kauko Pirinen, A History of Finland, 
New York, 1962, 152. 



Figure 6. Republic of Finland, 1917-40 



28 



Historical Setting 



emotions in Finland. For the middle classes, the Bolsheviks aroused 
the specter of living under revolutionary socialism. Workers, 
however, were inspired by the apparent efficacy of revolutionary 
action. The success of the Bolsheviks emboldened the Finnish wor- 
kers to begin a general strike on November 14, 1917, and within 
forty-eight hours they controlled most of the country. The most 
radical workers wanted to convert the general strike into a full sei- 
zure of power, but they were dissuaded by the SDP leaders, who 
were still committed to democratic procedures and who helped to 
bring an end to the strike by November 20. Already there were 
armed clashes between the Red Guards cind the White Guards; 
during and after the general strike, a number of people were killed. 

Following the general strike, the middle and the upper classes 
were in no mood for compromise, particularly because arms ship- 
ments and the return of some jaegers from Germany were trans- 
forming the White Guards into a credible fighting force. In 
November a middle-class government was established under the 
tough and uncompromising Pehr Evind Svinhufvud, and on 
December 6, 1917, it declared Finland independent. Since then, 
December 6 has been celebrated in Finland as Independence Day. 
True to his April Theses that called for the self-determination of 
nations, Lenin's Bolshevik government recognized Finland's 
independence on December 31. 

Throughout December 1917 and January 1918, the Svinhufvud 
government demonstrated that it would make no concessions to 
the socialists and that it would rule without them. The point of 
no return probably was passed on January 9, 1918, when the 
government authorized the White Guard to act as a state security 
force and to establish law and order in Finland. That decision in 
turn encouraged the workers to make a preemptive strike, and in 
the succeeding days, revolutionary elements took over the socialist 
movement and called for a general uprising to begin on the night 
of Jainuary 27-28, 1918. Meanwhile, the government had appointed 
a Swedish-speaking Finn and former tsarist general, Carl Gustaf 
Emil Mannerheim (1867-1951), as the commander of its military 
forces, soon to be called the Whites. Independently of the Reds, 
Mannerheim also called for military action to begin on the night 
of January 27-28. Whether or not the civil war was avoidable has 
been debated ever since, but both sides must share in the respon- 
sibility for its outbreak because of their unwillingness to com- 
promise. 

Within a few days of the outbreak of the civil war, the front lines 
had stabilized. The Whites, whose troops were mosdy farmers, con- 
trolled the northern and more rural part of the country. The Reds, 



29 



Finland: A Country Study 



who drew most of their support from the urban working class, con- 
trolled the southern part of the country, as well as the major cities 
and industrial centers and about one-h2ilf of the population. The 
Red forces numbered 100,000 to 140,000 during the course of the 
war, whereas the Whites mustered at most about 70,000. 

The soldiers of both armies displayed great heroism on the bat- 
tlefield; nevertheless, the Whites had a number of telling advan- 
tages — probably the most important of which was professional 
leadership — that made them the superior force. Mannerheim, the 
Whites' military leader, was a professional soldier who was experi- 
enced in conducting large-scale operations, and his strategic judg- 
ment guided the White cause almost flawlessly. He was aided by 
the influx of jaegers from Germany, most of whom were allowed 
to return to Finland in February 1918. The White side also had 
a number of professional Swedish military officers, who brought 
military professionalism even to the small-unit level. In addition ,^ 
beginning in February, the Whites had better equipment, most of 
which was supplied by Germany. Finally, the Whites had the benefit 
of more effective foreign intervention on their side. The approxi- 
mately 40,000 Russian troops remaining in Finland in January 1918 
helped the Finnish Reds to a small extent, especially in such tech- 
nical areas as artillery, but these troops were withdrawn after the 
signing of the Treaty of Brest-Litovsk on March 3, 1918, and thus 
were gone before fighting reached the crucial stage. On the White 
side, however, the Germans sent not only the jaegers and military 
equipment but also a reinforced division of first-rate troops, the 
Baltic Division, which proved superior to the Reds. 

The Red Guards suffered from several major disadvantages: poor 
leadership, training, and equipment; food shortages; the practice 
of electing officers democratically, which made discipline lax; and 
the general unwillingness of the Red troops to go on offensive oper- 
ations or even to operate outside their local areas. Ultimately, the 
Reds suffered most from a lack of dynamic leadership. There was 
no Finnish Lenin to direct the revolution, and there was no Fin- 
nish Trotsky to vitalize the Red armed forces. These Red disad- 
vantages became apparent in late March and early April 1918, when 
the Whites won a decisive victory by reducing the Red stronghold 
of Tampere, the major inland industrial center. At about the same 
time, German forces landed edong the southern coast, quickly driv- 
ing all before them, securing Helsinki on April 13 and, in the 
process, destroying about half of the remaining effective strength 
of the Red Guards. The last Red strongholds in southeastern Fin- 
land were cleared out in late April and early May 1918, and thou- 
sands of Finnish Reds, including the Red leadership, escaped into 



30 



Victory parade by German and Finnish White Guard troops, 

Helsinki, May 1918 
Courtesy Embassy of Finland, Washington 

the Soviet Union. On May 16, 1918, General Mannerheim entered 
Helsinki, formally marking the end of the conflict. Each year there- 
after, until World War II, May 16 was celebrated by the Whites 
as a kind of second independence day. 

The tragedy of the civil war was compounded by a reign of ter- 
ror that was unleashed by each side. In Red-dominated areas, 1 ,649 
people, mostiy businessmen, independent farmers, and other mem- 
bers of the middle class, were murdered for political reasons. This 
Red Terror appears not to have been a systematic effort to liqui- 
date class enemies, but rather to have been generally random. The 
Red Terror was disavowed by the Red leadership and illustrated 
the extent to which the Red Guard evaded the control of the leader- 
ship. More than anything else, the Red Terror helped to alienate 
the populace from the Red cause; it also harmed the morale of the 
Reds. 

The Red Terror confirmed the belief of the Whites that the Reds 
were criminals and traitors and were therefore not entitled to the 
protection of the rules of war. As a consequence, the Whites 
embarked on their own reign of terror, the White Terror, which 
proved much more ferocious than the Red Terror. First, there were 
reprisals against defeated Reds, in the form of mass executions 
of Red prisoners. These killings were carried on by local White 



31 



Finland: A Country Study 



commanders over the opposition of White leadership. At least 8,380 
Reds were killed, more than half after the Whites' final victory. 
Another component of the White Terror v^as the suffering of the 
Reds imprisoned after the war. The Whites considered these Reds 
to be criminals and feared that they might start another insurrec- 
tion. By May 1918, they had captured about 80,000 Red troops, 
whom they could neither house nor feed. Placed in a number of 
detention camps, the prisoners suffered from malnutrition and 
genergd neglect, and within a few months an estimated 12,000 of 
them had died. The third aspect of the White Terror was legal 
repression. As a result of mass trials, approximately 67,000 Reds 
were convicted of participating in the war, and of these 265 were 
executed; the remainder lost their rights of citizenship, although 
many sentences were later suspended or commuted. 

The civil W2ir was a catastrophe for Finland. In only a few months, 
about 30,000 Finns perished, less than a quarter of them on the batt- 
lefield, the rest in summary executions and in detention camps. These 
deaths amounted to about 1 percent of the total population of Fin- 
land. By comparison, the bloodiest war in the history of the United 
States, the Civil War, cost the lives of about 2 percent of the popu- 
lation, but that loss was spread out over four years. 

The memory of the injuries perpetrated during the war divided 
the society into two camps; victors and vanquished. The working 
class had suffered the deaths of about 25,000 from battle, execu- 
tion, or prison, and thousands of others had been imprisoned or 
had lost their political rights. Almost every working-class family 
had a direct experience of suffering or death at the hands of the 
Whites, and perhaps as much as 40 percent of the population was 
thereby cdienated from the system. As a result, for several genera- 
tions thereafter, a large number of Finns expressed their displeas- 
ure with the system by voting communist; and until the 1960s, the 
communists often won a fifth or more of the vote in Finland's 
national elections, a higher percentage than they did in most 
Western democracies. 

The divisions in society that resulted from the conflict were 
so intense that the two sides could not even agree on what it ought 
to be called. The right gave it the name "War of Independence," 
thereby stressing the struggle against Russian rule, for they had 
feared that a Red victory could well lead to the country's becoming 
a Soviet satellite. Leftists emphasized the domestic dimensions of 
the conflict, referring to it by the term "Civil War." Their feelings 
about the course of the hostilities were so intense that, until the late 
1930s, Social Democrats refused to march in the Independence Day 



32 



Historical Setting 



parade. Today, with the passing of decades, historians have gener- 
adly come to define the clash as a civil war. 

The Establishment of Finnish Democracy 

The end of the civil war in May 1918 found the government 
of Prime Minister Svinhufvud seated again in Helsinki. Many 
Finns, however, now questioned establishing the republic mentioned 
in the declaration of independence of December 6, 1917. Monar- 
chist sentiment was widespread among middle-class Finns after the 
civil war for two reasons: monarchist Germany had helped the 
Whites to defeat the Reds, and a monarchy seemed capable of 
providing strong government and, thus, of better protecting the 
country. Owing to the absence from parliament of most of the 
socialists, rightists held the majority, through which they sought 
to establish a monarchical form of government. On May 18, 1918, 
that is, two days after General Mannerheim's triumphal entry into 
Helsinki, Svinhufvud was elected the "possessor of supreme 
authority," and the search for a suitable monarch began. The new 
prime minister was a prominent White politician, Juho Kusti 
Paasikivi. Its strongly pro-German mood led the government to 
offer the crown to a German nobleman, Friedrich Karl, Prince of 
Hesse, in October 1918. The sudden defeat of Germany in Novem- 
ber 1918, however, discredited Svinhufvud' s overtly pro-German 
and monarchical policy and led to his replacement by Mannerheim. 

Meanwhile, the SDP was reorganized under Vaino Tanner, a 
Social Democrat who had not joined in the Red uprising, and this 
newly formed SDP repudiated the extremism and violence that had 
led to civil war. In the general parliamentary election of March 
1919, the SDP again became the largest single party, winning 80 
of 200 parliamentary seats. In conjunction with Finnish liberals, 
the SDP ensured that Finland would be a republic. On July 17, 
1919, the parliament adopted a constitution that established a repub- 
lican form of government, safeguarded the basic rights of citizens, 
and created a strong presidency with extensive powers and a six- 
year term of office. This Constitution was still in effect in 1988. 
Also in July 1919, the first president of Finland was elected. He 
was a moderate liberal named Kaarlo Juho Stahlberg, who had 
been the primary author of the Constitution. White Finland's main 
leaders, Svinhufvud, Mannerheim, and Paasikivi, retired from pub- 
lic life in 1918 and 1919, but each of the three would later be recalled 
to serve as president at a crucial moment in Finland's development 
— in 1931, 1944, and 1946, respectively. It is a tribute to the 
strength of the democratic tradition in Finland that the country 
was able to undergo a bloody and bitter civil war and almost 



33 



Finland: A Country Study 

immediately afterward recommence the practices of parliamentary 
democracy. 

The achievement of independence and the experience of the civil 
war helped to bring about a major realignment of the political par- 
ties. The Old Finn Party and the Young Finn Party were disbanded, 
and Finnish speakers were divided into two new parties: conser- 
vatives and monarchists formed the National Coalition Party (Kan- 
sallinen Kokoomuspuolue — KOK); and liberals and republicans 
formed the National Progressive Party (Kansallinen Edistys- 
puolue — ED), the ranks of which included President Stahlberg. The 
Agrarian Party (Maalaisliitto — ML) took on the interests of farm- 
ers, and the Swedish People's Party (Svenska Folkpartiet — SEP), 
which had been founded in 1906, continued to represent the in- 
terests of Swedish speakers. The process of rehabilitating the SDP 
proceeded so far that in 1926 it was entrusted briefly with forming 
a government, with Vaino Tanner as prime minister. Of the twenty 
governments formed from 1919 to 1939, one was headed by the 
SDP; five by the KOK; six by the ML; and eight by the ED. On 
the average, there was thus one government a year, but this 
apparent parliamentary instability was balanced somewhat by the 
continuity provided by the office of president — in twenty years there 
were only four presidents. 

Another major political party was the Communist Party of Fin- 
land (Suomen Kommunistinen Puolue — SKP), which was founded 
in August 1918 in Moscow by Finnish Reds who had fled to the 
Soviet Union at the close of the civil war. During the interwar 
period, the party was headed by Otto Kuusinen, a former minister 
in the Finnish Red government. Like much of the SKP leader- 
ship, he remained in exile in the Soviet Union, from where he 
directed the party's clandestine activities in Finland. The SKP 
attracted mainly left-wing militants and embittered survivors of 
the civil war. In the 1922 election, the SKP, acting under the 
front organization of the Finnish Socialist Workers' Party (Suo- 
men Sosialistinen Tyovaenpuolue — SSTP), received 14.8 percent 
of the total vote and twenty-seven seats in parliament. The follow- 
ing year the SSTP was declared treasonous and was outlawed. As 
a result, the communists formed another front organization, and 
in 1929 they won 13.5 percent of the vote before being outlawed 
in 1930. Deprived of political access, the communists tried to use 
strikes to disrupt the country's economic life. They had so far 
infiltrated the SAJ by 1930 that politically moderate trade unionists 
formed an entirely new organization, the Confederation of Fin- 
nish Trade Unions (Suomen Ammattiyhdistysten Keskusliitto — 
SAK), which established itself solidly in the coming years. 



34 



Vdind Tanner, a leader of the 
Finnish Social Democratic Party 
and prime minister, 1926-27 
Courtesy Embassy of Finland, 
Washington 




The competition between Finnish speakers and Swedish- speakers 
was defused by the Language Act of 1922, which declared both 
Finnish and Swedish to be official national languages. This law 
enabled the Swedish-speaking minority to survive in Finland, 
although in the course of the twentieth century the Swedish- speakers 
have been gradually Finnicized, declining from 11 percent of the 
population in the 1920s to about 6 percent in the 1980s. The una- 
nimity with which both language groups fought together in World 
War II attested to the success of the national integration. 

The enduring domestic political turmoil generated by the civil 
war led to the rise not only of a large communist party, but also 
to that of a large radical right-wing movement. The right wing con- 
sisted mainly of Finnish nationalists who were unhappy with the 
1920 Treaty of Dorpat (Tartu) that had formally ended the con- 
flict between the Soviet Union and Finland and recognized Soviet 
sovereignty over Eastern Karelia. The more extreme Finnish na- 
tionalists hoped for the establishment of a Greater Finland (Suur- 
Suomi) that would unite the Finnic peoples of Northern Europe 
within boundaries, running from the Gulf of Bothnia to the White 
Sea and from Estonia to the Arctic Ocean, that included Eastern 
Karelia. Eastern Karelia was the area, located roughly between 
Finland and the White Sea, that was inhabited by Finnic-speaking 
people who, centuries before, had been brought under Russian rule 
and had been converted to Eastern Orthodoxy (see The Era of 



35 



Finland: A Country Study 



Swedish Rule, this chapter). Since the nineteenth century, romantic 
Finnish nationalists had sought to reunite the Karelians with 
Finland. 

The most prominent organization advancing the Greater Fin- 
land idea was the Academic Kairelia Society (Akateeminen Karjala- 
Seura — AKS), which was founded in 1922 by Finnish students who 
had fought in Eastern Karelia against Soviet rule during the winter 
of 1921 to 1922. In the 1920s, the AKS became the dominant group 
among Finnish university students. Its members often retained their 
membership after their student days, and the AKS was strongly 
represented among civil servants, teachers, lawyers, physicians, 
and clergymen. Most Lutheran clergymen had been strongly pro- 
White during the civil war, and many of them were also active in 
the AKS and in the even more radical anticommunist Lapua move- 
ment. Thus the AKS created a worldview among an entire gener- 
ation of educated Finns that was relendessly anti-Soviet and 
expansionistic. (The Eastern Karelians were eventually assimilat- 
ed into Russian culture through a deliberate Soviet policy of dena- 
tionalization, aimed at removing any possibility of their being 
attracted to Finland.) 

The military muscle for the right wing was provided by the Civil 
Guard. In the 1920s, the Civil Guard had a strength of about 
100,000, and it received arms by parliamentary appropriation; 
however. Social Democrats, branded as leftists, were not welcome 
as members. Finally during World War II, the Civil Guard was 
integrated into the regular army, and peace was made with the 
Social Democrats. The Civil Guard included a women's auxiliary 
called Lotta Svard after a female hero of the war of 1808 to 1809. 
This organization performed important support work, behind the 
lines during the civil war and later during World War II, thereby 
releasing many men for service on the front. 

The apogee of right-wing nationalism was reached in the Lapua 
movement, from 1929 to 1932. The emergence of the SKP in the 
1920s had contributed to a rightward trend in politics that became 
evident as early as 1925 when Lauri Kristian Relander, a right- 
wing Agrarian, was elected president. In November 1929, a rightist 
mob broke up a communist rally at Lapua, a conservative town 
in northern Finland. That event inspired a movement dedicated 
to extirpating communism from Finland by any means, legal or 
illeg2il, an imperative that was termed the "Law of Lapua." 

Under pressure from the Lapua movement, parliament outiawed 
communism through a series of laws passed in 1930. Not content, 
however, the Lapuans embarked on a campaign of terror against 
communists and others that included beatings, kidnappings, and 



36 



Historical Setting 



murders. The Lapuans overreached themselves in 1930, however, 
when they kidnapped former president Stahlberg, whom they dis- 
liked for his alleged softness toward communism. Public revulsion 
against that act ensured the eventual decline of the Lapua 
movement. 

The final major political success of the Lapuans came in the elec- 
tion to the presidency in 1931 of the former White leader, Svin- 
hufvud, who was sympathetic to them. In February 1932, the 
Lapuans began calling for a "Finnish Hitler," and in March 1932, 
they used armed force to take over the town of Mantsala, not far 
from Helsinki, in what appeared to be the first step toward a rightist 
coup. Members of the Civil Guard were prominent in this coup 
attempt. The Lapuans had, however, underestimated President 
Svinhufvud, who used the Finnish army to isolate the rebellion and 
to suppress it without bloodshed. The leaders of the Mantsala revolt 
were tried and were convicted, and, although they were given only 
nominal sentences, the Lapua movement was outlawed. 

The last flowering of right-wing nationalism began the month 
after the Mantsala revolt, when a number of ex-Lapuans formed 
the Patriotic People's Movement (Isanmaallinen Kansanliike — 
IKL). Ideologically, the IKL, calling for a new system to replace 
parliamentary democracy, picked up where the Lapua movement 
had left off. Much more than had the Lapua movement, the IKL 
styled itself a fascist organization, and it borrowed the ideas and 
trappings of Italian fascism and of German Nazism. Unlike the 
Lapua movement, the IKL achieved scant respectability among 
middle-class Finns. A future president of Finland, Urho Kekko- 
nen, who in 1938 was minister of interior, banned the IKL. Like 
the communists, however, the IKL demanded the protection of 
the Constitution that it sought to destroy, and the IKL persuaded 
the Finnish courts to lift the ban. 

By the late 1930s, Finland appeared to have surmounted the 
threat from the extreme right and to have upheld parliamentary 
democracy. The White hero of the civil war. General Mannerheim, 
speaking in 1933 at the May 16 parade, called for nationsJ recon- 
ciliation with the words; "We need no longer ask where the other 
fellow was fifteen years ago [that is, during the civil war]." In 1937 
President Svinhufvud was replaced by a more politically moder- 
ate Agrarian Party leader, Kyosti Kallio, who promoted national 
integration by helping to form a so-called Red-Earth government 
coalition that included Social Democrats, National Progressives, 
and Agrarians. 

A final factor promoting political integration during the in- 
terwar years was the steady growth of material prosperity. The 



37 



Finland: A Country Study 

agricultural sector continued to be the backbone of the economy 
throughout this period; in 1938 well over half of the population 
was engaged in farming. The main problem with agriculture before 
1918 had been tenancy: about three-quarters of the rural families 
cultivated land under lease arrangements. In order to integrate these 
tenant farmers more firmly into society, several laws were passed 
between 1918 and 1922. The most notable was the so-called Lex 
Kallio (Kallio Law, named after its main proponent, Kyosti Kal- 
lio) in 1922; by it, loans and other forms of assistance were provided 
to help landless farmers obtain farmland. As a result, about 150,000 
new independent holdings were created between the wars, so that 
by 1937 almost 90 percent of the farms were held by independent 
owners and the problem of tenancy was largely solved. Agricul- 
ture was also modernized by the great expansion of a cooperative 
movement, in which farmers pooled their resources in order to pro- 
vide such basic services as credit and marketing at reasonable cost. 
The growth of dairy farming provided Finland with valuable export 
products. In summary, the agricultural sector of the Finnish econ- 
omy showed notable progress between the wars. 

In addition, Finnish industry recovered quickly from the devasta- 
tion caused by the civil war, and by 1922 the lumber, paper, pulp, 
and cellulose industries had returned to their prewar level of produc- 
tion. As before the war, the lumber industry still led the economy, 
and its success fueled progress in other sectors. By the Treaty of 
Dorpat in 1920, Finland had gained nickel deposits near the Arc- 
tic port of Petsamo. These deposits were the largest in Europe, and 
production began there in 1939. The success of Finnish products 
on the world market was indicated by the general rise in exports 
and by the surplus in the balance of payments. Finnish govern- 
ments protected economic prosperity by following generally con- 
servative fiscal policies and by avoiding the creation of large 
domestic deficits or foreign indebtedness. 

In the 1920s and the 1930s, Finnish society moved toward greater 
social integration and progress, mirroring developments in the Nor- 
dic region as a whole. Social legislation included protection of child 
workers; protection of laborers against the dangers of the work- 
place; compulsory social insurance for accidents, disability, and 
old age; aid for mothers and young children; aid for the poor, the 
crippled, the alcoholic, and the mentally deficient; and housing aid. 
Finland reflected European trends also in the emancipation of 
women, who gained voting rights in 1906 and full legal equality 
under the Constitution in 1919. The 1920s and the 1930s witnessed 
a great increase in the number of women in the work force, 
including the professions and politics. 



38 



Historical Setting 



Although in many ways Finland was predominantly nationalist 
and introspective in spirit, it participated increasingly in the out- 
side world, both economically and culturally, a trend that contribut- 
ed to its gradual integration into the international community. 

Finnish Security Policy Between the Wars 

The first security policy issue Finland faced upon becoming 
independent concerned the Aland Islands. Settled by Swedes in 
about the sixth century A.D., the islands were administered as part 
of Finland as long as Finland was part of Sweden. In 1809 they 
were transferred to Russian sovereignty, where they remained until 
the Russian Revolution. Throughout this period, almost all of the 
inhabitants of the Aland Islands, the Alanders, continued to be 
Swedish speakers. During the chaos of the Russian Revolution, 
the Alanders began negotiations to be united with Sweden, a move 
that was later supported in a plebiscite by 96 percent of the islands' 
inhabitants. The Swedish government welcomed this move, and 
in February 1918 sent troops who disarmed the Russian forces and 
the Red Guards on the islands. The Finns felt that the Swedish 
intervention in the Aland Islands represented an unwarranted 
interference in the internal affairs of Finland. Tension rose as both 
countries claimed the islands, Sweden emphasizing the principle 
of national self-determination and Finland pointing to its histori- 
cal rights and to the need to have the islands in order to defend 
Finland's southwestern coast. Germany then moved into the islands 
as part of its intervention in the civil war and forced out the Swedes; 
later that year, however, Germany handed the islands over to Fin- 
land. The Finns arrested the Aland separatist leaders on charges 
of treason. In 1920 both countries referred the matter to the League 
of Nations, which ruled the following year in favor of Finland. The 
Swedes were placated by the demilitarization of the islands as well 
as by the grant of extensive autonomy to the Alanders, a settle- 
ment that still obtained in 1988. 

Finland's interwar security policy was dominated by fear of an 
attack by the Soviet Union. Two of its priorities were to end the 
conflict between Finland and the Soviet Union — that had continued 
unofficially since the civil war — and to settle the Soviet-Finnish 
boundary. Negotiations were held intermittently between 1918 and 
1920, leading in October 1920 to the signing of the Treaty of Dor- 
pat. In it, Finland received all of the land it had held under Russian 
rule plus the Petsamo area, which gave Finland a port on the Arc- 
tic Ocean. At this point, Finland controlled more territory than 
it had at any other time in its history. The Soviet-Finnish border 
on the Karelian Isthmus was drawn only thirty kilometers from 



39 



Finland: A Country Study 

Leningrad (formerly St. Petersburg). The new border caused some 
Soviet apprehension because it placed the city and the vital naval 
base at Kronstadt within the range of the Finns' heavy artillery. 

Finland's relations with the Soviet Union had been problematic 
from the beginning, because of the Finns' strong historical distrust 
for Russia and the inherent incompatibility of the two political sys- 
tems. The Finns saw themselves as occupying an exposed outpost 
of Western civilization, an attitude that was well expressed in a 
poem by Uuno Kailas that included the verse: 

Like a chasm runs the border. 
In front, Asia, the East; 
In back, Europe, the West: 
Like a sentry, I stand guard. 

The mistrust between the countries had been strengthened by 
the tsarist policies of Russification, by the Bolsheviks' participa- 
tion in the Finnish revolution, and by continued Soviet efforts to 
foster subversion in Finland. From the Soviet viewpoint, the Greater 
Finland agitation and the blossoming of ideological anticommunism 
in Finland posed a threat. In 1932 the Soviet Union and Finland 
signed a ten-year non-aggression pact, which, however, did not 
mitigate the mutual distrust — illustrated in part by the Soviets' ces- 
sation of all trade between the two countries in 1934 — that was to 
culminate in war. 

In dealing with the Soviet threat, Finland was unable to fmd 
effective outside help. The Finns sought assistance first from the 
other Baltic states, and in March 1922 an agreement was signed 
by Finland, Estonia, Latvia, and Poland. The Finns soon realized, 
however, that in a crisis no substantial help would be forthcoming 
from these countries, and they thereupon sought support through 
active membership in the League of Nations. The breakdown of 
collective security in the 1930s led the Finns to seek security through 
a collective neutrality with the other Nordic states, but that arrange- 
ment offered no effective counterweight to the Soviets. The more 
powerful Britain and France did not take a major interest in the 
Baltic area. 

Throughout this period, the Finnish ruling circles had been 
strongly pro-German in outlook, in large part as a result of the 
civil war. For this reason, the Soviets developed the suspicion that 
Finland would allow Germany to use its territory as a base from 
which to invade the Soviet Union. Although Soviet fears were 
unfounded, the Finns did little to allay them. In 1937 a German 



40 



Historical Setting 



submarine flotilla visited Helsinki, and it was greeted warmly by 
the people and by the government. In April and in May 1938, the 
Finnish government presided over two great celebrations, mark- 
ing the twentieth anniversary of the entry of German troops into 
Helsinki and of the entry of Mannerheim's forces into Helsinki, 
respectively, events that numerous prominent Germans attended. 
The Finns were also indiscreet in allowing a German navsd squad- 
ron to visit Helsinki. Soviet suspicions were fuelled again by the 
visit to Finland in June 1939 of the German army chief of staff. 
General Franz Haider, who was received by the government in 
Helsinki and who viewed Finnish army maneuvers on the Karelian 
Isthmus. In summation, Finnish foreign policy between the wars 
was genuinely unaggressive in relation to the Soviet Union, but 
it lacked the appearance of unaggressiveness, a deficiency that Fin- 
land since World War II has been at pains to remedy. 

With German help, Finland established regular armed forces in 
1918 to 1919, using the army of the Whites as a foundation. 
Beginning in the 1920s, conscription was introduced, and most Fin- 
nish males were trained for military service. Finnish military doc- 
trine presumed an essentially defensive war in which Finland's 
forests, lakes, and other geographical obstacles could be exploited 
to advcintage. The Defense Review Committee, in its report of 1926, 
called for the establishment of a Finnish army of thirteen divisions, 
equipped with the most modem arms, as the surest means of 
deterring a possible Soviet invasion. Because of budget restraints, 
however, these recommendations were instituted only in part, so 
that when the Soviet Union did attack in November 1939, Fin- 
land had only nine available divisions, and their equipment was 
generally inadequate. Beginning in 1931, however. General Man- 
nerheim had contributed ably to Finnish military preparations from 
his position as chairman of the Defense Council, and thousands 
of citizens spent the summer of 1939, without pay, strengthening 
the Mannerheim Line of fortifications on the Karelian Isthmus. 
The line later proved to be the anchor of Finland's defenses in this 
important area. 

World War II, 1939-45 

For most of Finland's history, the country had lived on the 
periphery of world events, but for a few weeks during the win- 
ter of 1939-40, Finland stood at the center of the world stage. 
Finland's stand against Soviet aggression aroused the world's ad- 
miration. The Winter War, however, proved to be only a curtain- 
raiser for Finland's growing entanglement in World War II. 



41 



Finland: A Country Study 

The Winter War 

The underlying cause of the Winter War was Soviet concern 
about Nazi Germany's expansionism. With a population of only 
3.5 million, Finland itself was not a threat to the Soviet Union, 
but its territory, located strategically near Leningrad, could be used 
as a base by the Germans. The Soviets initiated negotiations with 
Finland that ran intermittently from the spring of 1938 to the sum- 
mer of 1939, but nothing was achieved. Finnish assurances that 
the country would never allow German violations of its neutrality 
were not accepted by the Soviets, who asked for more concrete 
guarantees. In particular, the Soviets sought a base on the north- 
ern shore of the Gulf of Finland, from which they could block the 
Gulf of Finland from hostile naval forces. The Finnish government, 
however, felt that accepting these terms would only lead to fur- 
ther, increasingly unreasonable, demands. 

The Nazi-Soviet Non- Aggression Pact of August 1939, by bring- 
ing together these former archenemies, revolutionized European 
politics. The secret protocol of the pact gave the Soviet Union a 
sphere of influence that included Finland, the Baltic states, and 
parts of Eastern Europe. When the Germans won a stunningly quick 
victory over Poland in September 1939, the Soviets hastened to 
take control in their sphere of influence. In addition to the land 
taken from Poland in September, the Soviets quickly turned the 
three Baltic states into quasi-protectorates. Finland followed these 
events closely; thus, when, on October 5, the Soviets invited Fin- 
land to discuss "concrete political questions," the Finns felt that 
they were next on the Soviets' agenda. Finland's first reaction was 
to mobilize its field army on October 6, and on October 10 Fin- 
land's reservists were called up in what amounted to a general 
mobilization. The following day the two countries began negotia- 
tions that were to last until November 8. 

In the negotiations, the main Soviet demand was that the Finns 
cede small parcels of territory, including a naval base on the Gulf 
of Finland that the Soviets wanted to help them protect Leningrad. 
In exchange, the Soviets offered to cede to Finland about 8,800 
square kilometers of Karelia along the Finnish border, or about 
twice the amount of land to be ceded by Finland. Unlike the previ- 
ous negotiations, these talks were conducted in the public eye, and 
the Finnish people, like the government, were almost unanimous 
in rejecting the Soviet proposals. The ostensible reasons for Fin- 
land's refusal were to protect its neutral status and to preserve its 
territorial integrity. In addition, moving the Finnish border on the 
Karelian Isthmus away from Leningrad would have given the 



42 



Finnish machine gunners during the Winter War (1939-40) 
Courtesy Embassy of Finland, Washington 

Soviets possession of much of the Une of Finnish fortifications, the 
loss of which would have weakened Finland's defenses. Underly- 
ing the hardline Finnish negotiating position were a basic mistrust 
of the Soviets and a feeling that the Soviet offer was merely a first 
step in subjugating Finland. In this suspicion of an ulterior mo- 
tive, the Finns were matched by the Soviets, who believed that Fin- 
land would willingly assist Germany in a future war. 

The Finnish government appears to have underestimated the 
Soviet determination to achieve these national security goals. The 
two main Finnish negotiators, Vaino Tanner and Juho Paasiki- 
vi, vainly urged the Finnish government to make more conces- 
sions, because they realized that Finland was completely isolated 
diplomatically and could expect no support from any quarter if 
events led to war. General Mannerheim also urged conciliating 
the Soviets, because Finland by itself could not fight the Soviet 
Union. When he was ignored, he resigned from the Defense 
Council and as commander-in-chief, saying that he could no 
longer be responsible for events. Mannerheim withdrew his resig- 
nation when war broke out, however, and served ably as the Fin- 
nish military leader. Some historians suggest that the war could 
have been prevented by timely Finnish concessions. It appears 
that both sides proceeded from a basic mistrust of the other that 
was compounded by mutual miscalculations and by the willing- 
ness to risk war. 



43 



Finland: A Country Study 

The Soviets attacked on November 30, 1939, without a decla- 
ration of war. The Soviet preparations for the offensive were not 
especially thorough, in part because they underestimated the Fin- 
nish capabilities for resistance, and in part because they believed 
that the Finnish workers would welcome the Soviets as liberators. 
However, almost no Finns supported the Soviet puppet govern- 
ment under the veteran communist Otto Kuusinen. In addition, 
in one of its last significant acts, the League of Nations expelled 
the Soviet Union because of its unprovoked aggression against 
Finland. 

The task facing the Finnish armed forces, to obstruct a vastly 
larger enemy along a boundary of about 1 ,300 kilometers, appeared 
impossible. Geography aided the Finns, however, because much 
of the northern area was a virtually impassable wilderness contain- 
ing a few, easily blocked roads, and Finland generally presented 
difficult terrain on which to conduct offensive operations. Thus the 
Finns were able to use only light covering forces in the north and 
to concentrate most troops in the crucial southeastern sector, com- 
prising the Karelian Isthmus and the area north of Lake Ladoga, 
that protected the isthmus from rear assault. The position on the 
isthmus was strengthened considerably by the Mannerheim Line. 
An additional Finnish advantage lay in the Finns' unorthodox mili- 
tary doctrine. They were trained in the use of small, mobile forces 
to strike at the fl2inks and the rear of road-bound enemies. By means 
of the so-call motti tactic (the name is taken from the Finnish word 
for a cord of firewood), they sought to break invading columns into 
smzdl segments, which were then destroyed piecemeal. The final 
advantage of the Finns was their phenomenally high morale; they 
knew they were fighting for their national survival. Finland's main 
disadvantage lay in the glaring, fifty- to-one disparity between its 
population and that of the Soviet Union. The Finnish hope was 
to hold out until help could arrive from the West, a forlorn hope 
as events turned out. 

Most observers expected an easy Soviet victory. The Soviets sim- 
ply advanced all cdong the front with overwhelming forces, appar- 
ently intending to occupy all of Finland. Thanks to the foresight 
the Soviets had shown in previous years by constructing bases and 
railroads near the Finnish border, they were able to commit much 
larger forces tham the Finns had anticipated. The main Soviet assault 
on the Mannerheim Line was stopped, though, in December 1939. 
Farther north along the line, the Finns were able to employ their 
motti tactics with surprising effectiveness. At the most famous of 
these engagements, the Battle of Suomussalmi, two Soviet divi- 
sions were virtually annihilated. By the end of December 1939, 



44 



Historical Setting 



the Finns had dealt the Soviets a series of humihating defeats. For 
a few weeks, the popular imagination of the outside world was cap- 
tured by the exploits of the white-clad Finnish ski troops gliding 
ghostlike through the dark winter forests, and in general by the 
brave resistance of the "land of heroes." 

The Soviet invasion brought the Finns together as never before. 
In an act that only a few years before would have been unthinka- 
ble, on Christmas Eve in December 1939, middle-class Finns placed 
lighted candles on the graves of Finnish Red Guards who had died 
in the civil war. The magnificent courage displayed by Finnish sol- 
diers of all political persuasions during the Winter War of 1939-40 
led Mannerheim to declare afterwards that May 16 would no longer 
be celebrated, but that another day would be chosen to com- 
memorate ' 'those on both sides who gave their lives on behalf of 
their political convictions during the period of crisis in 1918." 

The defeats and the humiliations suffered by the Soviet Union 
made it even more determined to win the struggle. The military 
command was reorganized, and it was placed under General S. 
K. Timoshenko. The Soviets made intensive preparations for a 
new offensive, assembling masses of tanks, artillery, and first-class 
troops. On February 1, 1940, the Soviet offensive began, and this 
time it was confined to the Karelian Isthmus. Soviet tactics were 
simple: powerful artillery bombardments were followed by repeated 
frontal assaults, using masses of tanks and infantry. The Finnish 
defenders were worn down by the continual attacks, the artillery 
and the aerial bombardments, the cold, and the lack of relief and 
of replacements. On February 11, 1940, the Soviets achieved a 
breakthrough in the Mannerheim Line that led to a series of Fin- 
nish retreats. By early March, the Finnish army was on the verge 
of total collapse. Finland was saved only by agreeing quickly to 
Soviet terms, which were encompassed in the Peace of Moscow, 
signed on March 13, 1940. 

By the terms of the Peace of Moscow, Finland ceded substantial 
territories: land along the southeastern border approximately to 
the line drawn by the Peace of Uusikaupunki in 1721, including 
Finland's second-largest city, Viipuri; the islands in the Gulf of 
Finland that were the object of the negotiations in 1938-39; land 
in the Salla sector in northeastern Finland (near the Murmansk 
Railroad); Finland's share of the Rybachiy Peninsula in the Pet- 
samo area; and the naval base at Hanko on the Gulf of Finland, 
which was leased for thirty years. The ceded territories contained 
about one-eighth of Finland's population; virtually all of the in- 
habitants moved over to Finnish territory, thereby losing their 
homes and livelihoods (see fig. 7). 



45 



Finland: A Country Study 




Source: Based on information from Anthony F. Upton, Finland in Crisis, 1940-41: A Study 
in Small-Power Politics, London, 1964, 22; and D. G. Kirby, Finland in the Twentieth 
Century, Minneapolis, 1979, x. 

Figure 7. Finland, Adjustments to the Frontier, 1940-1944 



46 



Historical Setting 



Finland's losses in the war were about 25,000 dead, 10,000 per- 
manently disabled, and another 35,000 wounded, out of a popu- 
lation of only 3.5 million. Estimates of Soviet losses vary greatly. 
A subsequent Soviet leader, Nikita Khrushchev, estimated in his 
memoirs that the Soviet losses were about one million men. In 
addition, the Soviets lost much of their military credibility. Foreign- 
ers had observed keenly the performance of the Red Army in Fin- 
land, with the result that the military capabilities of the Soviet Union 
were widely discounted. Four months after the conclusion of the 
Winter War, Adolf Hitler decided to invade the Soviet Union, an 
event that historians generally consider a turning point of World 
War II. 

It is true that the Red Army had performed badly in Finland, 
but there had been some extenuating circumstances. The winter 
of 1939 to 1940 was one of the coldest winters of the century, and 
the Soviet troops were not trained for action under Arctic condi- 
tions. The Soviet officer corps had been decimated by the purges 
of the 1930s, and the officers were intimidated by the presence of 
political commissars within their units. There was, especially in 
the first phase of the fighting, poor coordination of the various arms 
(infantry, artillery, armor, aircraft), and there were deficiencies 
in preparation and in intelligence. In the year following the Winter 
War, the Soviets worked hard at correcting their weaknesses, with 
the result that in 1941 the Red Army was a much more effective 
military machine. 

The Continuation War 

The sudden admission of defeat by the Finnish government 
shocked the Finnish people, who had been misled by overly 
optimistic government reports on the military situation; however, 
the resilience of democratic society helped the people to absorb 
defeat without undergoing radical change. Instead, the Finns threw 
themselves into two major tasks: absorbing the 400,000 refugees 
from the ceded territories, and rearming. 

In the succeeding months, Soviet meddling in Finnish affairs and 
other overbearing actions indicated to the Finns a continuing Soviet 
desire to subjugate Finland. Among other actions, the Soviets 
demanded the demilitarization of the Aland Islands (not called for 
by the Peace of Moscow), control of the Petsamo nickel mines, and 
the expulsion of Vaino Tanner from the Finnish government. More 
ominously, the Soviets demanded to send an unlimited number of 
troop trains through Finnish territory to the Soviet base at Hanko. 
This event having occured near the time that the Soviets annexed 
the Baltic states in 1940, the Finns began to fear that they would 



47 



Finland: A Country Study 

be next. When Soviet foreign minister Viacheslav Molotov visit- 
ed Berlin later that year, he admitted privately to his German hosts 
that the Soviets intended to crush Finland. The Finnish-Soviet Peace 
and Friendship Society (Suomen-Neuvostoliiton rauhan ja ystavyy- 
den seura — SNS), a communist-front organization that quickly 
gained 35,000 Finnish members, conducted subversive activities 
in open defiance of the Finnish government. The SNS was banned 
in August, thus preserving public order, but on other matters of 
concern to the Soviets the Finnish government was forced to make 
concessions. Unknown to the Soviets, however, the Finns had made 
an agreement with Germany in August 1940 that had stiffened their 
resolve. 

Hitler soon saw the value of Finland as a staging base for his 
forthcoming invasion of the Soviet Union. The informal German- 
Finnish agreement of August 1940 was formalized in September, 
and it allowed Germany the right to send its troops by railroad 
through Finland, ostensibly to facilitate Germany's reinforcement 
of its forces in northern Norway. A further German- Finnish agree- 
ment in December 1940 led to the stationing of German troops 
in Finland, and in the coming months they arrived in increasing 
numbers. Although the Finnish people knew only the barest details 
of the agreements with Germany, they approved generally of the 
pro-German policy, and they were virtually unanimous in want- 
ing to recover the ceded territories. 

By the spring of 1941, the Finnish military had joined the Ger- 
man military in planning for the invasion of Russia. In mid-June 
the Finnish armed forces were mobilized. It was not politically 
expedient for the Finnish government to appear as the aggressor, 
however, so Finland at first took no part in the Nazi invasion of 
the Soviet Union on June 22. Three days later, Soviet aerial attacks 
against Finland gave the Finnish government the pretext needed 
to open hostilities, and war was declared on June 26. Finland thus 
appeared to be defending itself against an act of Soviet aggression, 
a posture that helped unite the Finnish people for the war effort. 

The Finns called this conflict the Continuation War, because 
it was seen as a continuation of events that began with the Winter 
War. What began as a defensive strategy, designed to provide a 
German counterweight to Soviet pressure, ended as an offensive 
strategy, aimed at invading the Soviet Union. The Finns had been 
lured by the prospects of regaining their lost territories and rid- 
ding themselves of the Soviet threat. In July 1941 , the Finnish army 
began a major offensive on the Karelian Isthmus and north of Lake 
Ladoga, and by the end of August 1941, Finnish troops had reached 
the prewar boundaries. By December 1941, the Finnish advance 



48 



Historical Setting 



had reached the outskirts of Leningrad and the Svir River (which 
connects the southern ends of Lake Ladoga and Lake Onega). By 
the end of 1941, the front became stabilized, and the Finns did 
not conduct major offensive operations for the following two and 
one-half years. 

Finland's participation in the war brought major benefits to Ger- 
many. First, the Soviet fleet was blockaded in the Gulf of Finland, 
so that the Baltic was freed for training German submarine crews 
as well as for German shipping activities, especially the shipping 
of vital iron ore from northern Sweden and nickel from the Petsamo 
area. Second, the sixteen Finnish divisions tied down Soviet troops, 
put pressure on Leningrad, and cut one branch of the Murmansk 
Railroad. Third, Sweden was further isolated and was forced to 
comply with German wishes. 

Despite Finland's contributions to the German cause, the 
Western Allies had ambivalent feelings, torn between their residual 
goodwill for Finland amd the need to support their vital ally, the 
Soviet Union. As a result, Britain declared war against Finland, 
but the United States did not; there were no hostilities between 
these countries and Finland. In the United States, Finland was 
highly regarded, because it had continued to make payments on 
its World War I debt faithfully throughout the interwar period. 
Finland also earned respect in the West for its refusal to 2illow the 
extension of Nazi anti-Semitic practices in Finland. Jews were not 
only tolerated in Finland, but Jewish refugees also were allowed 
asylum there. In a strange paradox, Finnish Jews fought in the 
Finnish army on the side of Hitler. 

Finland began to seek a way out of the war after the disastrous 
German defeat at Stalingrad in January- February 1943. Negotia- 
tions were conducted intermittently between Finland on the one 
side and the Western Allies and the Soviet Union on the other, 
from 1943 to 1944, but no agreement was reached. As a result, 
in June 1944 the Soviets opened a powerful offensive against Fin- 
nish positions on the Karelian Isthmus and in the Lake Ladoga 
area. On the second day of the offensive, the Soviet forces broke 
through Finnish lines, and in the succeeding days they made 
advances that appeared to threaten the survival of Finland. The 
Finns were equal to the crisis, however, and with some German 
assistance, halted the Russians in early July, after a retreat of about 
one hundred kilometers that brought them to approximately the 
1940 boundary. Finland had been a sideshow for the Soviets, 
however, and they then turned their attention to Poland and to 
the Balkans. Although the Finnish front was once again stabilized, 
the Finns were exhausted, and they needed desperately to get out 



49 



Finland: A Country Study 

of the war. Finland's military leader and national hero, Gustaf Man- 
nerheim, became president, and he accepted responsibility for end- 
ing the war. 

In September 1944, a preliminary peace agreement was signed 
in Moscow between the Soviet Union and Finland. Its major terms 
severely limited Finish sovereignty. The borders of 1940 were 
reestablished, except for the Petsamo area, which was ceded to the 
Soviet Union. Finland was forced to expel aU German troops from 
its territory. The Porkkala Peninsula (southwest of Helsinki) was 
leased to the Soviets for fifty years, and the Soviets were given transit 
rights to it. Various rightist organizations were abolished, includ- 
ing the Civil Guard, Lotta Svard, the Patriotic People's Move- 
ment, and the Academic Karelia Society. The Communist Party 
of Finland (Suomen Kommunistinen Puolue — SKP) was allowed 
legal status. The size of the Finnish armed forces was restricted. 
Finland agreed to pay reparations to the Soviet Union. Finland 
agreed to hold war crimes trials. Finally, an Allied Control Com- 
mission, which was dominated by the Soviets, was established to 
check Finland's adherence to the terms of the preliminary peace. 
This preliminary peace treaty remained in effect until 1947, when 
the final Soviet-Finnish peace treaty was signed. Although Finland 
had been defeated for a second time, it had managed to avoid 
occupation by the Soviets. 

The Lapland War 

As early as the summer of 1943, the German high command 
began making plans for the eventuality that Finland might con- 
clude a separate peace with the Soviet Union. The Germans planned 
to withdraw forces northward in order to shield the nickel mines 
near Petsamo. During the winter of 1943 to 1944, the Germans 
improved the roads from northern Norway to northern Finland, 
and they accumulated stores in that region. Thus the Germans were 
ready in September 1944, when Finland made peace with the Soviet 
Union. While German ground troops withdrew northward, the Ger- 
man navy mined the seaward approaches to Finland and attempt- 
ed to seize Suursaari Island in the Gulf of Finland. Fighting broke 
out between German and Finnish forces even before the Soviet- 
Finnish preliminary peace treaty was signed, and the fighting in- 
tensified thereafter, as the Finns sought to comply with the Soviet 
demand that all German troops be expelled from Finland. The Finns 
were thus placed in a situation similar to that of the Italians and 
of the Romanians, who, after surrendering to the Allies, had to 
fight to free their lands of German forces. The Finns' task was com- 
plicated by the Soviet stipulation that the Finnish armed forces 



50 




Marshal Gustaf Mannerheim, 1941 
Courtesy Embassy of Finland, 
Washington 



51 



Finland: A Country Study 



be reduced drastically, even during the campaign against the 
Germans. 

The capable Finnish general, Hjalmar Siilasvuo, the victor of 
Suomussalmi, led operations against the Germans; in October and 
November 1944, he drove them out of most of northern Finland. 
The German forces under General Lothar Rendulic took their 
revenge, however, by devastating large stretches of northern Fin- 
land. More than one-third of the dwellings in that area were de- 
stroyed, and the provincial capital of Rovaniemi was burned down. 
In addition to the property losses, estimated as equivailent to about 
US$300 million (in 1945 dollars), suffered in northern Finland, 
about 100,000 inhabitants became refugees, a situation that add- 
ed to the problems of postwar reconstruction. (After the war the 
Allies convicted Rendulic of war crimes, and they sentenced him 
to twenty years in prison.) The last German troops were expelled 
in April 1945. As a final, lingering effect of the Lapland War, the 
Germans planted numerous mines during their retreat; some of 
the mines were so cleverly placed that they continued to kill and 
maim civilians who triggered them as late as 1948. 

The Effects of the War 

World Wsir II had a profound impact on Finland. Approximately 
86,000 Finns died in the war — about three times the losses suffered 
during the civil war. In addition, about 57,000 Finns were per- 
manently disabled, and the vast majority of the dead and the disa- 
bled were young men in their most productive years. The war had 
also left 24,000 war widows; 50,000 orphans; and 15,000 elderly, 
who had lost, in the deaths of their sons, their means of support. 
In addition, about one-eighth of the prewar area of Finland was 
lost, including the Petsamo area with its valuable nickel mines. One- 
half million Finns were refugees — more than 400,000 from the ceded 
or leased territories and about 100,000 from Lapland, where their 
homes had been destroyed. Another effect of the war was the finan- 
cial burden imposed by the cost of maintaining one-half million 
troops in the field for several years and by the requirement to pay 
the Soviets reparations in kind worth US$300 million (in 1938 dol- 
lars). The Soviet lease of the Porkkala Peninsula, less than twenty 
kilometers west of Helsinki, as a military base was a blot on the 
nation's sovereignty. Finally, an intangible, but real, restriction 
was placed on Finland's freedom of action in international affairs. 
Finland's relationship with the Soviet Union was permanently 
altered by the war. 

Despite the great losses inflicted by the war, Finland fought for 
and preserved its independence; nevertheless, had the Soviets been 



52 



Historical Setting 



vitally concerned about Finland, there is no doubt that Finnish in- 
dependence would have been extinguished. Finland emerged from 
the war conscious of these realities and determined to establish a 
new and constructive relationship with the Soviet Union. 

The Postwar Era 

The signing of the preliminary peace treaty between Finland and 
the Soviet Union on September 19, 1944, marked the beginning 
of a new era for Finland. Its hallmark was to be a diametrical change 
in Finnish policy toward the Soviet Union; the traditional hostility 
was to be replaced by a policy of friendship. Finnish leaders felt 
that only a genuine rapprochement between the two countries could 
guarantee Finland's long-term survival as an independent state. 
In the late 1980s, the new policy, operative for more than forty 
years, appeared to have been successful in preserving Finland's 
freedom. Domestically, Finland's society and economy have un- 
dergone rapid changes that have made the country a prosperous 
social- welfare state. Finland's achievements in the postwar years 
have been surviving external threats and thriving as a modern in- 
dustrialized country. 

The Cold War and the Treaty of 1948 

The Finnish statesman Juho Kusti Paasikivi was a leading propo- 
nent of the relationship between Finland and the Soviet Union that 
permitted Finland's postwar development. For decades, Paasikivi 
had been the leading noncommunist Finn advocating reconcilia- 
tion with the Soviet Union. Before World War I, he had been on 
Old Finn and a Compliant (see The Era of Russification, this ch.), 
who advocated accommodation with Russification. In the negoti- 
ations over the Treaty of Dorpat in 1920, he had argued for draw- 
ing Finland's border farther away from Leningrad. In the fall of 
1939, he had recommended giving in to some of the Soviet 
demands, because he considered the ensuing war avoidable. He 
had also opposed Finland's entry into the Continuation War. As 
a former prime minister under the Finnish White government of 
1918 and as a member of the Conservative National Coalition Party 
(Kansallinen Kokoomuspuolve — KOK), Paasikivi was politically 
an anticommunist. His lifelong study of history, however, convinced 
him that Finland's policies toward the Soviet Union needed to be 
governed by pragmatism. By late 1944, Finland's previous policy 
of antagonism to the Soviet Union had been shown to be counter- 
productive, because it had nearly led to Finland's extinction as an 
independent state. Summoned out of private life to serve — first as 
prime minister from October 1944 to March 1946 and then as 



53 



Finland: A Country Study 

president from March 1946 to March 1956 — Paasikivi established 
the policy of accommodation with the Soviet Union that, with time, 
became almost universally accepted among the Finns. The change 
in Finland's policy was so marked that some observers considered 
the post- 1944 years to be the era of the "Second Republic." 

The immediate postwar years of 1944 to 1948 were filled with 
uncertainty for Finland because it was in a weakened condition 
and the because new policy of reconciliation was still being formed. 
The Allied Control Commission, established by the 1944 armistice 
to oversee Finland's internal affairs until the final peace treaty was 
concluded in 1947, was dominated by the Soviets. Under the leader- 
ship of a Soviet, Marshal Andrei Zhdanov, the commission checked 
Finland's adherence to the terms of the preliminary peace of Sep- 
tember 1944. The first test of Finland's new policy of reconcilia- 
tion was thus to observe faithfully the treaty with the Soviets, 
including the punctual payment of reparations and the establish- 
ment of war crimes trials. Eight leading Finnish politicians were 
tried for war crimes in proceedings lasting from November 1945 
to February 1946. Among the accused were ex-president Risto Ryti 
(served 1940-44), who, along with six other prominent Finnish poli- 
ticians, was convicted of plotting aggressive war against the Soviet 
Union and was sentenced to prison. 

The war crimes trials and other stipulations of the armistice were 
distasteful to the Finns, but their careful compliance led to the 
reestablishment of national sovereignty. Compliance may have been 
facilitated by Finland's having its national hero, Mannerheim, as 
president to carry out these policies, until he resigned for health 
reasons in March 1946 and was succeeded by Paasikivi. The sign- 
ing of the Treaty of Paris on February 10, 1947, led in September 
1947 to the removal of the Allied Control Commission. 

In their strict fulfillment of the Soviet terms of peace, the Finns 
faced other difficulties. The armistice agreement of September 1944 
had legalized the SKP, which had been outlawed in 1930. In Oc- 
tober 1944, the SKP led in the formation of the Finnish People's 
Democratic League (Suomen Kansan Demokraattinen Liitto — 
SKDL). Commonly referred to as the People's Democrats, the 
SKDL claimed to represent a broad spectrum of progressive forces. 
From its inception, however, the SKDL has been dominated by 
the SKP and has provided the electoral vehicle by which members 
of the SKP have been sent to the Eduskunta. 

In March 1945, in the first parliamentary elections held after 
the war, the SKDL scored a major success by winning fifty-one 
seats and becoming the largest single party in the Eduskunta (the 
ML had forty-nine and the SDP had forty-eight). Several factors 



54 



Historical Setting 



account for the success of the communists. A strong sympathy for 
communism among a large number of voters had persisted since 
the Finnish civil war. In addition, many Social Democratic voters 
were alienated from the SDP because of its ardent support of the 
recent war that had cost Finland so dearly. Many Finns who suffered 
under the depressed economic conditions of postwar Finland voted 
for the SKDL as a protest gesture. Finailly, the SKDL proved adept 
at electoral politics, de-emphasizing its communist ties and 
emphasizing its devotion to democracy, to full employment, and 
to a peaceful foreign policy. 

The SKDL played a large role in Finnish politics during the 
immediate postwar years. By November 1944, President Man- 
nerheim recognized the growing power of the communists when 
he appointed to the cabinet the first communist, Yrjo Leino, ever 
to hold such a position. Following the election of March 1945, Leino 
was appointed to the important post of minister of interior, a posi- 
tion from which he controlled, among other things, the state secu- 
rity police and a large mobile police detachment. The power of 
the communists was at its greatest from 1946 to 1948, when the 
SKDL held, or shared, as many as eight of twelve cabinet posts. 
These included that of prime minister, which was held by Mauno 
Pekkala, who also served as co-minister of defense. 

Pressures on Finland reached a peak in early 1948. In February 
the communists took Czechoslovakia by coup, an act that height- 
ened international tensions considerably. The Soviets then requested 
that Finland sign a treaty nearly identical to those forced on some 
of their satellite states in Eastern Europe. By March there were 
rumors of a possible communist coup in Finland. Although it is 
not clear that a coup was imminent. President Paasikivi took precau- 
tionary measures. The Finnish armed forces were under his con- 
trol, and he summoned them in strength to Helsinki, where they 
would have proved more than a match for the police units of the 
ministry of interior that were suspected of involvement in the coup. 

In negotiating the requested treaty, meanwhile, the Soviets 
showed a willingness to accept a neutralized Finland. Paasikivi se- 
cured significant changes in the treaty that gave Finland substan- 
tially more independence with respect to the Soviet Union than 
was enjoyed by the East European states under Soviet domination. 
Paasikivi had served notice on the Soviets that they would not get 
their way through pressure, but rather would have to use military 
force. This they were reluctant to do in the tense international at- 
mosphere of early 1948. 

The Treaty of Friendship, Cooperation, and Mutual Assistance 
(FCMA — see Appendix B), which was signed on April 6, 1948, 



55 



Finland: A Country Study 

has since then provided the foundation for Soviet- Finnish relations. 
The key provision of the treaty, in Article 1, calls for military 
cooperation between Finland and the Soviet Union if Germany, 
or a country allied with it, attempts to invade Finland or the Soviet 
Union by way of Finnish territory. Article 2 of the treaty calls for 
military consultations to precede actucd cooperation. Finland's 
sovereignty is safeguarded, however, because mutual assistance is 
not automatic but must be negotiated. The treaty helped to stabi- 
lize Soviet-Finnish relations by giving the Soviet Union guaran- 
tees that it would not face a military threat from the direction of 
Finland. The Soviets have been pleased with the treaty, and be- 
fore expiration its original ten-year term has been extended to 
twenty years on three occasions — 1955, 1970, and 1983. 

When new elections were held in July 1948, the SKDL suffered 
a sharp drop in support, falling from fifty-one to thirty-eight seats 
in the Eduskunta. Communists were not included in the new 
government formed under the Social Democrat Karl-August 
Fagerholm, and there was no communist participation in Finland's 
government again until 1966. 

The end of World War II had found Finland in a thoroughly 
weakened state economicsdly. In addition to its human and physi- 
cal losses, Finland had to deal with more than 400,000 refugees 
from the territories seized by the Soviets. In an attempt to resolve 
the refugee problem through a program of resetdement, the parlia- 
ment adopted the Land Act of 1945. Through the program thus 
established, the state bought up farmland through compulsory pur- 
chases 2ind redistributed it to refugees and to ex-servicemen, creating 
in the process 142,000 new holdings. Finland's large class of 
independent farmers was thereby expanded considerably. Although 
many of the resulting holdings were too small to be economically 
viable, they speeded the integration of the refugees into the social 
and economic fabric of the country. 

Reparations were another burden for Finland. From the failure 
of the reparations demands imposed by the Treaty of Versailles, 
the Soviets had drawn the lesson that, to be effective, reparations 
should take the form of deliveries of goods in kind, rather than of 
financial payments. As a result, the Finns were obligated to make 
deliveries of products, mainly machine goods, cable products, mer- 
chant ships, paper, wood pulp, and other wood products. About 
one-third of the goods included as reparations came from Finland's 
traditionally strong forest industries, and the remainder came from 
the shipbuilding and the metallurgical industries, which were as 
yet only partially developed in Finland. The reparations paid from 
1944 to 1952 amounted to an annual average of more than 2 



56 



Historical Setting 



percent of Finland's gross national product (GNP — see Glossary). 
The reparations were delivered according to a strict schedule, with 
penalties for late shipments. As the earnestness of the Finns in com- 
plying with the Soviet demands became apparent, the Soviets relent- 
ed somewhat by extending the payment deadline from 1950 to 1952, 
but they still prevented Finland from participating in the Marshall 
Plan (European Recovery Program). The United States played an 
important role, nonetheless, by mediating the extension of finan- 
cial credits of more than US$100 million from its Export-Import 
Bank to help Finland rebuild its economy and meet its reparations 
obligations punctually. 

The Finns turned adversity into advantage by using the indus- 
trial capacities created to meet the reparations obligations as the 
basis for thriving export trades in those products. As a result, Fin- 
land's industrial base acquired greater balance than before, 
between, on the one hand, Finland's traditional industries of lum- 
ber, wood pulp, and paper products, and, on the other hand, the 
relatively new industries of shipbuilding and machine production. 
Finland's growing integration into the world economy was demon- 
strated by its joining the General Agreement on Tariffs and Trade 
(GATT— see Glossary) in 1949. 

Domestic Developments and Foreign Politics, 1948-66 

The underlying assumption of Paasikivi's foreign policy was that 
the Soviets could tolerate the existence of an independent Finland 
only because Finland was peripheral to the Soviet Union's main 
strategic interests in Central Europe. Paasikivi sought to reinforce 
that Soviet attitude by actively demonstrating that Finland would 
never again be a source of danger to the Soviet Union. The com- 
bination of traditional neutrality plus friendly measures toward the 
Soviets was known as the Paasikivi Line. Continued by Paasiki- 
vi's successor as president, Urho Kekkonen (in office 1956-81), 
the policy came to be known as the so-called Paasikivi-Kekkonen 
Line. It remained the foundation of Finland's foreign policy in the 
late 1980s. 

Paasikivi's statesmanship was rewarded in 1955, when the Soviet 
Union returned the Porkkala Peninsula to Finland, well before the 
end of the fifty-year lease granted in 1944. The return of Porkkala 
ended the stationing of Soviet troops on Finnish soil, and it strength- 
ened Finland's claim to neutrsdity. The Soviets also allowed Fin- 
land to take a more active part on the international scene. In 
December 1955, Finland was admitted to the United Nations (UN); 
in that same year Finland joined the Nordic Council (see Foreign 
Relations, ch. 4). 



57 



Finland: A Country Study 



In the three parhamentary elections held during Paasikivi's 
presidency— those of 1948, 1951, and 1954— the SDP and the ML 
received the largest number of votes and provided the basis for 
several of the government coalitions. These so-called Red-Earth 
coalitions revived the prewar cooperation between these parties and 
laid the basis for their subsequent cooperation, which was a major 
feature of Finnish politics after World War 11. The communist- 
dominated SKDL retained some power because of domestic dis- 
content; in the elections of 1951 and 1954, it won more than 20 
percent of the vote. 

Domestic politics during Paasikivi's presidency were character- 
ized by conflict and instability. During those ten years, 1946 to 
1956, there were nine government coalitions, nearly one per year. 
The issues that divided the parties and brought such frequent 
changes of government were primarily economic, centering on the 
rising cost of living. One early attempt to solve conflicts among 
the various sectors of the economy was the so-called General Agree- 
ment made in 1946 between the Confederation of Finnish Trade 
Unions (Suomen Ammattiyhdistysten Keskusliitto — SAK) and the 
Confederation of Finnish Employers (Suomen Tyonantajain 
Keskusliitto — STK). The General Agreement, which called for 
compulsory negotiations between labor and management, was used 
as a basis for reconciling industrial disputes. Another milestone 
was the Casde Peace Agreement of 1951 that brought together the 
main economic interest groups for a wage and price freeze that 
helped to establish a precedent for wage and price control. Neverthe- 
less, throughout these years there were frequent strikes. 

The intensity of the conflict over economic issues was demon- 
strated by the general strike of 1956, the first general strike in Fin- 
land since November 1917. The cause of the nineteen-day general 
strike was an increase in food prices for which the trade unions 
demanded a wage increase as compensation. When the employers 
refused the wage increase, the trade unions called the general strike. 
More than 400,000 workers — about one-fifth of the total work 
force — participated, the flow of various vital supplies was disrupted, 
and some violence occurred. The strike ended when the employ- 
ers agreed to the wage increases demanded by the unions. These 
wage increases, however, were largely cancelled out by subsequent 
rises in consumer prices. 

Paasikivi's successor, Kekkonen, assumed office in March 1956, 
and he remained as president until 1981. A member of the ML, 
he had been one of only three members of the parliament who voted 
against the Peace of Moscow in 1940. The following year, he had 
been one of the most outspoken advocates of the Continuation War. 



58 



Juho Kusti Paasikivi 
president of Finland, 1946-56 
Courtesy Embassy of Finland, 
Washington 



Urho Kekkonen, president 
of Finland, 1956-81 
Courtesy Embassy of Finland, 
Washington 



Finland: A Country Study 

By 1943, however, he had reversed himself totally in calling for 
reconciliation between Finland and the Soviet Union, and he re- 
mained a leading advocate of that policy for the remainder of his 
life. From 1944 to 1946, he served as minister of justice, a posi- 
tion from which he prosecuted Finnish war criminals. Between 1950 
and 1956, he served as prime minister in five cabinets, before be- 
ing elected president in 1956. 

Kekkonen demonstrated his mastery of politics by bringing Fin- 
land successfully through two major crises with the Soviet Union, 
the first in 1958 to 1959 (the Night Frost Crisis) and the second 
in 1961 (the Note Crisis). The Night Frost Crisis received its name 
from the Soviet leader, Nikita Khrushchev, who declared that 
Soviet-Finnish relations had undergone a "night frost." The im- 
mediate origins of the crisis lay in Finnish elections of 1958, in which 
the SKDL won the largest popular vote and the largest parliamen- 
tary representation of all Finnish parties but was not given a place 
in the Finnish government headed by the Social Democrat, 
Fagerholm. As a result, the Soviets recalled their ambassador from 
Helsinki and generally made known their unhappiness with the 
Fagerholm government. 

Two reasons are generally brought forward for this instance of 
Soviet interference in Finland's domestic politics. One was the 
Soviet dislike of certain Social Democrats, whom they referred to 
as "Tannerites," after the long-time leader of the SDP, Vaino Tan- 
ner. The second reason may have been the international crisis of 
the late 1950s that centered on West Berlin. Underlying the Soviet 
actions was the traditional fear of a German resurgence; the Soviets 
imagined a renewed German military threat's developing through 
Germany's North Adantic Treaty Organization (NATO) partners, 
Denmark and Norway. 

Kekkonen defused the crisis by pulling the ML out of the govern- 
ment coalition, thereby toppling the SDP government that was 
objectionable to the Soviets. The alacrity with which Kekkonen 
placated the Soviets resolved the crisis. 

The Note Crisis of 1961, far more serious than the 1958 crisis, 
constituted the most severe strain in Soviet-Finnish relations since 
1948. On October 30, 1961, the Soviet government sent a note 
to Finland that called for mutual military consultations according 
to Article 2 of the 1948 FCMA treaty. For Finland, the note 
represented a real threat of Soviet military intervention. As dur- 
ing the 1958 crisis, a tense international situation coupled with 
Soviet fears of a German military resurgence led to Soviet pres- 
sure on Finland. There was also a domestic side to the crisis; as 
in 1958, the Soviets considered certain elements on the Finnish 



60 



Historical Setting 



political scene to be objectionable. The Soviets were concerned 
about the SDP, especially about the SDP nominee for president, 
Olavi Honka. Delivered only two and one-half months before the 
Finnish presidential elections, the Soviet note demonstrated clearly 
which candidate the Soviets preferred. In response to the note, Kek- 
konen sought to placate Soviet fears by dissolving the Finnish parlia- 
ment in November 1961. He then flew to Novosibirsk, where he 
met with Khrushchev and, after three days of personal consulta- 
tions, succeeded in winning Khrushchev's confidence to such a 
degree that the call for military consultations was rescinded. The 
Note Crisis not only constituted a personal diplomatic triumph for 
Kekkonen but also led to an era of increased confidence-building 
measures between the two governments. 

For Kekkonen, the lesson of the Note Crisis was that the Soviets 
needed continual reassurance of Finnish neutrality. He pointed out 
that Soviet mistrust of Finnish declarations of neutrality in the 1930s 
had led to war. After 1961, the Finns took great pains to demon- 
strate their neutrality and to prevent a repetition of the Note Cri- 
sis. The effort to win the trust of the Soviets led Kekkonen in two 
directions — expanded trade and cultural contacts between the two 
countries and a more active international political role in which 
Finland worked to promote peace in Northern Europe and around 
the world. 

Kekkonen sought to create ever-wider zones of peace around Fin- 
land; thus, he became a determined advocate of an entirely neu- 
tral Northern Europe, a position he had enunciated as early as 1952. 
The Danes and the Norwegians, however, generally did not accept 
neutrality because they would thereby lose the military protection 
of NATO. In 1963 Kekkonen also proposed a Nordic Nuclear- 
Weapons-Free Zone (Nordic NWFZ — see Neutrality, ch. 4). Kek- 
konen 's advocacy of these peace issues helped him to win the vir- 
tually unquestioned confidence of the Soviets and precluded a 
repetition of the Note Crisis. 

Conflict among Finnish political parties was so great that, dur- 
ing the twenty-five years of Kekkonen' s tenure as president, there 
were twenty-six governments. Among these twenty-six governments 
were six nonpartisan caretaker governments, formed when con- 
flicts among the parties became too intense to permit their joining 
in coalition governments. As during the years of the Paasikivi 
presidency, there was greater agreement on foreign policy issues 
than on economic concerns. An especially divisive issue was whether 
or not to link agricultural income, consumer prices, and workers' 
wages, and thus to reconcile the competing aims of the main sec- 
tors of the economy — farming, capital, and labor. 



61 



Finland: A Country Study 



The conflict over domestic policies was also evident in the con- 
sistent strength of the protest vote in elections. The electoral vehi- 
cle of the communists, the SKDL, polled more than 20 percent 
of the vote in the 1958, the 1962, and the 1966 parliamentary elec- 
tions. That same discontent brought about the emergence of another 
protest party, the Social Democratic Union of Workers and Small 
Farmers (Tyovaen ja Pienviljelijain Sosialidemokraattinen Liitto — 
TPSL), which broke off from the SDP in 1959. The TPSL advo- 
cated both a friendlier stance toward the Soviet Union and more 
active measures to protect workers' and farmers' economic interests.. 
In 1959 a breakaway group from the ML formed a party called 
the Finnish Small Farmers' Party; in 1966 its name was changed 
to the Finnish Rural Party (Suomen Maaseudun Puolue — SMP). 
Led by Veikko Vennamo, the SMP spoke for the so-called For- 
gotten Finland, the small farmers, mainly of northern and eastern 
Finland, who lived a precarious economic existence. The SMP 
made a breakthrough into the ranks of the major parties in the 
parliamentary elections of 1970 by winning eighteen seats in the 
Eduskunta, but in following years its power fluctuated greatly. 

Kekkonen's personal triumph in the Note Crisis led not only 
to his reelection as president in 1962, but also to the dominance, 
for a short time, of his own party, the ML. (From 1958 to 1966, 
the SDP was considered too anti- Soviet to be part of a government.) 
The ML provided the basis for the various coalition governments 
formed during those years. In its desire to be at the center of Fin- 
nish politics, the ML changed its name to the Center Party 
(Keskustapuolue — Kesk) in 1965. The presence of this large and 
important agrarian-based party at the center of the political spec- 
trum has characterized the Finnish political system since indepen- 
dence. Fifty-four of sixty-four Finnish governments (through 1988) 
included the Agrarian/Center Party, compared with thirty- three 
for the SDP, and twenty- six for the KOK; furthermore, three of 
Finland's nine presidents, Relander, Kallio, and Kekkonen have 
belonged to this party (see table 3, Appendix A). 

Finland's economy underwent a major transformation in the 
1950s and the 1960s, shifting from a predominantly agrarian econ- 
omy to an increasingly industrial one (see Economic Development, 
ch. 3). The number of workers engaged in agriculture and for- 
estry dropped from about 50 percent to about 25 percent, and the 
decline of this traditionally dominant sector of the economy con- 
tinued into the late 1980s. After the Soviet reparations were paid 
off in 1952, Soviet-Finnish trade did not decline, but rather it 
increased. In 1947 the Treaty of Paris had been followed by a 
Finnish- Soviet commercial treaty that provided the framework for 



62 



Historical Setting 



expanded trade between the two countries (see Regional Econom- 
ic Integration, ch. 3). The Five-Year Framework Agreement of 
1951, which has been renewed repeatedly, established this trade 
on a highly regulated basis. To a large extent, the trade consisted 
of Finland's selling machine goods to the Soviets in exchange for 
crude oil. Finland benefited from the arrangement because Fin- 
nish products sold well in the Soviet market, which could be counted 
on regardless of fluctuations in the Western economic system. In- 
creased trade between the two countries also strengthened the po- 
litical relationship between them. 

Throughout the postwar period, the Soviet Union has been Fin- 
land's single most important trading partner, generally account- 
ing for 20 percent to 25 percent of Finland's total imports and 
exports. Nevertheless, Finland's goal has been to create a balanced 
trade system embracing both East and West, and more than 70 
percent of Finland's trade has been with noncommunist states. Fin- 
land's main trading partners, after the Soviet Union, have been 
Sweden, Britain, the Federal Republic of Germany (West Germa- 
ny), and the United States, in order of importance. This trade has 
consisted mainly of the export of timber, pulp, and paper products 
in exchange for other countries' manufactures, technology, and 
raw materials for Finland's various industries (see Foreign Eco- 
nomic Relations, ch. 3). In maintaining good economic ties with 
these countries, Finland has had to overcome persistent Soviet sus- 
picions; however, Finland was allowed to join the European Free 
Trade Association (EFTA — see Glossary) as an associate member 
in 1961 in the so-called FINEFTA agreement. The members of 
EFTA, including Finland, signed free- trade agreements with the 
European Economic Community (EEC — see Glossary) in 1973. 
Finland placated the Soviets for these initiatives by signing a trade 
agreement in 1973 with the Council for Mutual Economic 
Assistance (CMEA, CEMA, or Comecon — see Glossary), the 
Soviets' organization for trade and cooperation with its East 
European allies. Nevertheless, through the trading arrangements 
with EFTA and the EEC, Finland gained greater economic in- 
dependence from the Soviet Union. 

The economic growth that Finland has experienced in this cen- 
tury has laid the foundation for its social welfare state. The benefits 
of economic prosperity have been spread around to the popula- 
tion as a whole, with the result that the Finns have enjoyed a level 
of material security unsurpassed in their history. Conceived not 
as a whole, but as a series of responses to specific needs, the social 
welfare system has become strongly rooted. Among its main com- 
ponents are several forms of social insurance: allowances for mothers 



63 



Finland: A Country Study 

and children, aimed at encouraging people to have children; pen- 
sions; and national health insurance. By 1977 social welfare 
expenditures accounted for over 20 percent of GDP (see Growth 
of the Social Welfare System, ch. 2). The general effect of these 
measures has been to raise the standard of living of the average 
Finn and to remove the sources of discontent caused by material 
want. 

Finland in the Era of Consensus^ 1966-81 

The parliamentary elections of 1966 marked a major turning 
point in Finnish politics. As in most of the recent Finnish parliaimen- 
tary elections, the main debate centered on domestic issues. One 
issue in 1966 was the need to promote economic development in 
the northern part of Finland, which was lagging behind the more 
prosperous southern part of the country. The parliamentary elec- 
tions were a great victory for the socialist parties, which gained 
103 seats, their first absolute majority in parliament since 1916 (see 
table 4, Appendix A). Changes in the leadership of the SDP — 
which under a new party chairman, Rafael Paasio, had become 
more temperate in its attitude toward the Soviet Union — had made 
the SDP a viable partner in the government. Kekkonen thereupon 
took the major step of allying his Kesk with the SDP and with other 
leftist parties in order to help achieve a greater measure of cooper- 
ation in Finnish politics. The Red-Earth coalition was thus revived, 
and the communists enjoyed their first participation in government 
since 1948. Center-left coalition governments dominated Finnish 
politics for several elections after 1966, and this cooperation among 
center and left parties contributed to a growing consensus in Fin- 
nish political life. 

The core of the developing consensus politics was the participa- 
tion of all market sectors in major economic decisions. This had 
begun earlier, but was now intensified. A milestone, for example, 
was the conclusion in March 1968 of the Liinamaa Agreement, 
the first comprehensive settlement among the economic interest 
groups that regulated agricultural prices, workers' wages, and 
industrial productivity. This agreement brought together the trade 
union organization, SAK, the employers' organization, STK, and 
the Confederation of Agricultural Producers (Maatadoustuottajain 
Keskusliitto — MTK). The agreement was made possible in large 
part by Kekkonen 's active intervention. In succeeding years, the 
creation of package deals to regulate conflicts among the various 
sectors of the economy became a regular feature of political life. 
One important government- sponsored meeting among these vari- 
ous economic interests, at the Korpilampi Motel near Helsinki 



64 



Historical Setting 



in 1977, led to the coining of the phrase "the spirit of Korpilampi" 
to describe this growing spirit of cooperation. 

Another milestone in Finland's development was reached in 1969 
with the amalgamation of two competing trade union organiza- 
tions — the smaJler, communist-dominated SAJ and the larger, So- 
cial Democrat-dominated Confederation of Finnish Trade Unions 
(Suomen Ammattiyhdistysten Keskusliitto — SAK) — into the Cen- 
tral Organization of Finnish Trade Unions (Suomen Ammattiliit- 
tojen Keskusjarjesto — SAK). By the 1980s, it had succeeded in 
organizing about 85 percent of Finland's total work force, one of 
the highest percentages in the world. 

Between the watershed election of 1966 and the late 1980s, there 
were several more parliamentary elections. Throughout these elec- 
tions, the SDP remained the largest party, and Kesk, the KOK, 
and the SKDL competed for the next three positions. A series of 
center-left governments came into power from 1966 to the 1980s, 
and these generally brocid-based coalitions — together with the pack- 
age deals for regulating conflicts in the economy — helped to make 
this period the most politically stable in the history of the Finnish 
Republic. Although there was some instability at the cabinet level, 
where until recent ye2irs there was a new cabinet nearly every year, 
the presidency added stability; between 1946 and the late 1980s, 
Finland had only three presidents. 

The pathbreaking center-left cabinet of 1966, which was head- 
ed by the Socicd Democrat Rafael Paasio as prime minister, lasted 
until 1968 (see table 5, Appendix A). Conflicts over economic is- 
sues, especially incomes and prices policy, brought the downfall 
of the Paasio cabinet and the formation of a new one under the 
Social Democrat, and head of the Bank of Finland, Mauno 
Koivisto. This cabinet, which lasted until the parliamentary elec- 
tion of 1970, included the three socialist parties, Kesk, and the SFP. 

In spite of the growing consensus in Finnish politics, the 1970s 
witnessed increased votes for non- government parties and sustained 
conflicts in parliament. In the 1970 parliamentary elections, for 
example, Kesk lost about one- third of its strength, and the KOK, 
which was not part of the government, rose from fourth place among 
parties to second. Even more striking, the SMP, which relied on 
small, economiczdly vulnerable farmers, increased its vote almost 
tenfold. In addition, the conflicts among the parties were so in- 
tense that no coalition could be established, and, instead, a non- 
partisan caretaker government was installed. It lasted sixty-three 
days. Finally, a broad-based coalition was established under the 
Kesk politician Ahti Karjalainen. This coalition included Kesk, 
the SDP, the SKDL, the SFP, and the Liberal People's Party 



65 



Finland: A Country Study 

(Liberaalinen Kansanpuolue — LKP). The SKDL withdrew from 
this government in 1971 because of conflicts within the party. Kar- 
jalainen's coalition fell in late 1971 because of disagreement over 
economic issues, especially inflation, the balance of payments, and 
growing unemployment. New parliamentary elections were called 
for early 1972, two years ahead of schedule. Another nonpartisan 
caretaker government held power until the election. 

The results of the 1972 elections were similar to those of the 1970 
elections, except that the KOK fell from second place to fourth. 
Political conflicts among the parties, however, stiU kept a worka- 
ble coalition from being formed, and, as a result, a minority SDP 
government was created with Paasio as prime minister. It lasted 
five months. President Kekkonen's direct intervention helped to 
bring about the formation of a coalition under the Social Democrat 
Kalevi Sorsa in the fall of 1972; this four-party coalition included 
the SDP, Kesk, the SFP, and the LKP. The Sorsa government 
held together until the 1975 parliamentary election, an unconmionly 
long time in recent Finnish history. 

Finland's growing economic difficulties, which stemmed from 
the world economic crisis that began in 1973, provided the back- 
ground for the parliamentary elections of 1975. The SKDL 
increased its vote to almost 19 percent, making it the second lar- 
gest pcirty. Following the election, the parties were reluctant to agree 
on terms for a coalition government. Kekkonen thereupon 
appointed Keijo Liinamaa, a retired Kesk leader, as prime minister 
of a caretciker government that lasted about five months. Kekko- 
nen's direct, public intervention made possible the formation of 
a large, five-party (the SDP, Kesk, the SKDL, the SFP, and LKP) 
coalition with the Kesk politician Martti Miettunen as prime 
minister. The following year, the SDP and the SKDL left the coa- 
lition as a result of conflicts with the other parties. The Miettunen 
government fell in 1977 because of Finland's continuing economic 
difficulties, and a center-left government was formed under Kalevi 
Sorsa, Finland's sixtieth government in sixty years. Included in 
the five-party coalition were the SDP, Kesk, the SKDL, the SFP, 
and LKP. The following year, the SFP withdrew from the coali- 
tion because of conflicts with the other parties, but the Sorsa govern- 
ment lasted until the 1979 parliamentary election. 

The main issues in the 1979 parliamentary election were unem- 
ployment and t2ixation. The election witnessed a resurgence of the 
KOK, which became the second largest party, behind the SDP, 
but was still excluded from governmental coalitions (see table 6, 
Appendix A). A major political crisis, called the "Midsummer 
Bomb," was unleashed by a Kesk leader's incautious statement 



66 



Historical Setting 



that the KOK was kept out of power because it was unacceptable 
to the Soviets, although in reality domestic political considerations 
may have played a role in its exclusion from the government. 
Another protest against the established consensus was registered 
in the 1979 election by the Finnish Christian League (Suomen 
Kristillinen Liitto — SKL), which represented a religious backlash 
against secularization and which polled 4.8 percent of the total vote. 
Nevertheless, a center-left coalition was established under Koivisto; 
the coalition included the SDP, Kesk, the SKDL, and the SFP, 
and it lasted until early 1982, when Koivisto was elected president. 

Corresponding to the growth of political consensus in Finland 
was the increase in social consensus: the divisions of previous de- 
cades, especially the conflicts between language groups and between 
the working class and the middle class, diminished. 

The Swedish-speaking minority declined steadily in the twen- 
tieth century from 350,000, or 13 percent of the population, in 1906 
(the year the SFP was founded to protect the interests of Swedish 
speakers) to about 300,000, or 6 percent of the population, in the 
1980s. The decline has been attributed both to emigration to Sweden 
(largely for economic reasons) and to the gradual Finnicization of 
society. Swedish remained one of the two official languages of Fin- 
land, nevertheless, and a separate Swedish-language educational 
establishment was maintained (see Swedish- speaiking Finns, ch. 2). 

The slow decline of the communist vote in Finland since the 1960s 
has been interpreted as a sign that the wounds caused by the civil 
war have gradually healed and that Finland has achieved a larger 
measure of nation2il integration. In the seven parliamentary elec- 
tions from 1945 to 1966, the SKDL won 20 to 25 percent of the 
popular vote and a correspondingly large representation in parlia- 
ment. Active participation in the government, beginning in 1966, 
was followed by a decline in its electoral success. In 1969, Finnish 
communists dropped the aim of revolution from their program. 

One major problem that developed in these years, however, was 
the urban-rural cleavage, which was compounded by regional differ- 
ences. The relatively urbanized, industrialized, and prosperous 
south and west contrasted strongly with the basically rural, agrar- 
ian, and less prosperous north and east. The protest vote was typi- 
cally stronger in the north and the east than it was elsewhere. The 
government has tried to relieve discontent with subsidies for the 
smaller, less-prosperous farmers and through other social welfare 
measures (see Agriculture, ch. 3). 

During the postwar era, Finland changed from a primarily agrar- 
ian society to an urban society, from a land of peasant proprietors 
to a modern society with a predominance of urban-dwelling. 



67 



Finland: A Country Study 

white-collar and blue-collar workers (see Demography; Social Struc- 
ture, ch. 2). Along with the changes in social and in economic cir- 
cumstances went changes in popular attitudes; in particular, 
cosmopolitanism increased. Just as modem productive technolo- 
gy has made possible an unprecedented material prosp>erity, so also 
has modem communications technology speeded the diffusion of 
new ideas, breaking down Finland's culturad isolation. In the 
process, however, traditioncd values have come under assault by 
cultural imports from Western Europe. 

President Kekkonen exerted a formidable influence on Finland's 
development during his long tenure as president from 1956 to 1981 . 
He was re-elected in 1962 and in 1968 by larger percentages of 
votes than any other Finnish president had ever received. In 1973 
his term of office was extended for four yesirs by special act of parlia- 
ment. This extension, it now appears, was designed to reassure 
the Soviets that Finnish foreign policy would remain the same, 
despite the free-trade agreement with the EEC that was concluded 
in 1973. It was evidence of Kekkonen 's international stature that 
he hosted the Conference on Security and Cooperation in Europe 
from 1973 to 1975, a conference that culminated in the signing 
of the Helsinki Accords in 1975. By then Kekkonen was generally 
recognized as indispensable to Finnish politics, and he was re-elected 
again in 1978 with the support of all major parties. Bad health forced 
him to resign in October 1981 at the age of eighty-one; he lived 
in retirement until his death in 1986. His successor as president, the 
Social Democrat Mauno Koivisto, began his term of service in Janu- 
ary 1982. 

The great majority of the Finnish people and their political par- 
ties have continued to agree on the Paasikivi-Kekkonen Line as 
the basis of Finland's foreign policy. Only a few political extremists 
have opposed it, and they have been excluded from any role in 
formulating foreign policy. A tiny splinter group from the conser- 
vatives appeared during the 1970s as a protest against Kekkonen's 
allegedly too pro-Soviet foreign policy. Since 1980 this group has 
been called the Constitutional Party of the Right (Pemstuslailli- 
nen Oikeistopuolue — POP), but it has achieved virtually no in- 
fluence. 

« * * 

Although there are a number of useful historical works about 
Finland in English, the best sources are in Swedish and Finnish. 
A good introduction to Finnish history is Eino Jutikkala's A His- 
tory of Finland. Anthony F. Upton's well regarded The Finnish 



68 



Historical Setting 



Revolution, 1917-1918 deals with a crucial episode in modern Fin- 
nish history. Risto Alapuro's State and Revolution in Finland is a 
sophisticated examination of the social forces involved in the for- 
mation of the Finnish state. C. Leonard Lundin's Finland in the 
Second World War was a pioneering work when it appeared in 1957 
and is still considered the definitive book on the subject in English. 
Lundin's essay on Russification in Edward C. Thaden's Russifica- 
tion in the Baltic Provinces and Finland, 1855-1914 is a solid work on 
that subject. D.G. Kirby's Finland in the Twentieth Century is an in- 
terpretive history of the period through the 1970s. Among the best 
available works that analyze the development of Finland's foreign 
policy since World War II is Roy Allison's Finland's Relations with 
the Soviet Union, 1944-84. There is a useful collection of speeches 
by President Urho Kekkonen, edited by Tuomas Vilkuna titled 
Neutrality: The Finnish Position. (For further information and com- 
plete citations, see Bibliography.) 



69 



Chapter 2. The Society and Its Environment 




Medieval church with uncoursed stone walls and 
brick- decorated gables, built circa 1480 at Hollola, 
approximately 100 kilometers from Helsinki 



Finland has been on Europe's periphery, both physically 
and socially, for almost all its history. It is Europe's northernmost 
country, with a quarter of its area above the Arctic Circle. By the 
late 1980s, however, modern means of communication had sub- 
stantially reduced its physical remoteness from the rest of Europe. 
Modern technology also had lessened winter's hold on the coun- 
try. Finns lived comfortably, and they moved about freely the whole 
year. In the social realm, Finland had left its traditional poverty 
and backwardness behind. Since World War II, it had become one 
of the world's most advanced societies. Its citizens enjoyed prosperi- 
ty and meaningful employment, as well as benefits from the social 
measures they had forged, which guaranteed everyone a decent 
and humane share of the prosperity. 

During the course of their history, Finns have cJways moved 
about, both within their country and abroad. The years after World 
War II saw, however, an unprecedented population shift away from 
the countryside to the increasingly more urbanized south. New 
industries and a rapidly growing service sector meant that the work 
force not only relocated, but also changed in character. Agricul- 
ture's and forestry's combined share of the work force declined from 
about 50 percent in 1950 to about 10 percent in 1980. Industry's 
share remained unchanged at about 20 percent, while that of the 
service sector doubled from 9 percent to 18 percent. Between 1950 
and 1980, the number of students and pensioners quadrupled, going 
from 6 to 24 percent, reflecting a wealthier and healthier society. 

Personal relationships also changed. Families became smaller; 
divorce became more common. A growing public sector meant that 
many tasks previously managed by the family could now be 
entrusted to the state. Lessened dependence on the family also 
meant greater freedom for women. This was reflected in new legis- 
lation that gave women greater equality with men. Traditional 
habits persisted, however, and in the late 1980s Finland's women 
still had a secondary place at home, in the workplace, and in politics. 

Finland was a remarkably homogeneous country. It had no racial 
minorities. The largest minority group, the Swedish-speaking Finns, 
was so well assimilated with the majority that there were fears it 
would eventu2Jly disappear. In fact, the group's share of the coun- 
try's population had dropped from 12 percent to 6 percent in the 
twentieth century. Two very small minorities, the Lapps (or Sami) 
and the Gypsies, remained apart from the majority. They still 



73 



Finland: A Country Study 



suffered from some discrimination and from poor living standards, 
but legislation and more open attitudes on the part of the majority 
were improving their lot. 

Finland was virtually free of the religious divisions that bedeviled 
many other societies. One of the two state churches, the Lutheran 
Church of Finland, had nearly 90 percent of the population as mem- 
bers. Religious freedom was guaranteed by law, and Finns also 
belonged to sever2il dozen other churches. Because Finnish society 
had become increasingly secularized, differences of opinion about 
moral issues caused less friction than they had in the past. 

Finns maintained their traditional respect for education. Edu- 
cation had gradually become more accessible, and an ever greater 
number of Finns were studying at all levels. The old system, which 
excluded many, had been replaced by one that attempted to meet 
individual schooling needs and to keep open as many options for 
further training as possible; no one went without education for lack 
of money. 

Finland, like its Nordic neighbors, had created a system of pub- 
lic welfare measures that was among the most advanced in the 
world. Through a steady progression of legislation, Finns came to 
be protected from many of life's vicissitudes. Coverage was virtu- 
ally universal, and it was seen as a right rather than as charity. 
Income security measures guaranteed Finns a livelihood despite 
age, illness, or unemployment. The state also provided many ser- 
vices that assisted Finns in their daily life, such as child care, family 
counseling, and health care. Although some social problems per- 
sisted, the quality of life for Finns overall had steadily and, in many 
instances, dramatically improved. Better medical care meant that 
Finns enjoyed improved health, while subsidized housing brought 
them better and roomier shelter. Efforts also were being made to 
protect the natural environment. 

Geography 

Finland is the northernmost country on the European continent. 
Although other countries have points extending farther north, vir- 
tually all of Finland is north of 60 degrees north latitude; nearly 
a quarter of the land area and fully one-third of the latitudinal extent 
of the country lie north of the Arctic Circle (see fig. 1). 

Size, External Boundaries, and Geology 

In area, Finland has 304,623 square kilometers of land and 
33,522 square kilometers of inland water, a total of 338, 145 square 
kilometers. It shares borders on the west with Sweden for 540 kilo- 
meters, on the north with Norway for 720 kilometers, and on the 



74 



The Society and Its Environment 



east with the Soviet Union for 1 ,268 kilometers. There are approx- 
imately 1,107 kilometers of coastline on the Gulf of Finland (south), 
the Baltic Sea (southwest), and the Gulf of Bothnia (west). The 
rugged coastline is deeply indented with bays and inlets. The off- 
shore region is studded with islands. 

The most predominant influences on Finland's geography were 
the continental glaciers that scoured and gouged the country's sur- 
face. When the glaciers receded about 10,000 years ago, they left 
behind them moraines, drumlins, and eskers. Other indications 
of their presence are the thousands of lakes they helped to form 
in the southern part of the country. The force of the moving ice 
sheets gouged the lake beds, and meltwaters helped to fill them. 
The recession of the glaciers is so recent (in geologic terms) that 
modern-day drainage patterns are immature and poorly established. 
The direction of glacial advance and recession set the alignment 
of the lakes and streams in a general northeast to southwest linea- 
tion. The two Salpausselka Ridges, which run parallel to each other 
about twenty-five kilometers apart, are the terminal moraines. At 
their greatest height they reach an elevation of about 200 meters, 
the highest point in southern Finland. 

Landform Regions 

Many countries of the world can be divided into distinct geo- 
graphic regions, in each of which some physical characteristic is 
dominant, almost to the exclusion of others. In Finland, the same 
physical characteristics are common to each of the four geographic 
regions into which the country is divided (see fig. 8). Regional differ- 
ences in Finland lie, therefore, in subtle combinations of physical 
qualities. In archipelago Finland, rock and water are dominant. 
Coastal Finland consists of broad clay plains where agriculture plays 
a leading role. The interior lake district supports extensive forests. 
Upland Finland is covered by Arctic scrub. Nonetheless, each of 
these regions contains elements of the others. For instance, patches 
of agriculture extend far northward along some rivers in Lapland, 
and in southern Finland a substantial bogland, the Suomenselka, 
is sometimes referred to as Satakunta Lapland because it has the 
character of Arctic tundra. 

Archipelago Finland, consisting of thousands of islands and sker- 
ries, extends from the southwestern coast out into the Baltic Sea. 
It includes the strategically significant Aland Islands, positioned 
at the entrance to the Gulf of Bothnia. After World War I, both 
Finland and Sweden laid claim to the islands, which are culturally 
more Swedish than Finnish. For strategic reasons, however, the 
League of Nations awarded the Aland Islands to Finland in 1921 



75 



Finland: A Country Study 



(see Finnish Security Policy Between the Wars, ch. 1). A principal 
reason for this decision was that, during the winter, the islands 
are physically linked to Finland by the frozen waters of the sea and 
are hence essential for the country's defense. This myriad of forest- 
covered and bare bedrock islands was formed and continues to be 
formed by the process of uplift following the last glaciation. 

The rest of the country is also still emerging from the sea. The 
weight of the continental glaciers depressed the land over which 
they moved, and even now, a hundred centuries after their reces- 
sion, Finland is rising up from this great load through the process 
of isostatic rebound. In the south and the southwest, this process 
is occurring slowly, at a rate of twenty-five to thirty centimeters 
a century. Farther north in the Ostrobothnia area, uplift is more 
rapid, amounting to eighty or ninety centimeters a century. The 
process also means that Finland is growing about seven square 
kilometers yearly as land emerges from the sea. 

Coastal Finland consists of broad clay plains extending from the 
coast inland, for no more than 100 kilometers. These plains slope 
southward from the morainic Salpausselka Ridges in southern Fin- 
land. Along the Gulf of Bothnia coast, the plains slope southwest 
from upland areas. The land of coastal Finlcind is used for agricul- 
ture and dairy farming. 

The interior lake district is the largest geographic region, and 
it is perhaps what most foreigners think of when they imagine Fin- 
land. The district is bounded to the south by the Salpausselka 
Ridges. Behind the ridges extend networks of thousands of lakes 
separated by hilly forested countryside. This landscape continues 
to the east and extends into the Soviet Union. As a consequence, 
there is no natur2d border between the two countries. Because no 
set definition of what constitutes a lake and no procedures for count- 
ing the number of lakes exist, it has been impossible to ascertain 
exacdy how msiny lakes the region has. There are, however, at least 
55,000 lakes that are 200 or more meters wide. The largest is Lake 
Saimaa, which, with a surface area of more than 4,400 square 
kilometers, is the fifth largest l2ike in Europe. The deepest lake has 
a depth of only 100 meters; the depth of the average lake is 7 meters. 
Because they are shallow, these many lakes contain only slightly 
more water than Finland's annual rainfall. The hilly, forest-covered 
landscape of the lake plateau is dominated by drumlins and by long 
sinuous eskers, both glacial remnants. 

Upland Finland extends beyond the Arctic Circle. The extreme 
north of this region is known as Lapland. The highest points in 
upland Finland reach an elevation of about 1,000 meters, and they 
are found in the Kilpisjarvi area of the Scandinavian Keel Ridge. 



76 




mi n . • ..«*■ - J Tx- T7....: * 



The Society and Its Environment 



In the southern upland region the hills are undulating, while in 
the north they are rugged. Much of upland Finland is not moun- 
tainous, but consists of bogs. 

Finland's longest and most impressive rivers are in the north. 
The Kemijoki has the largest network of tributaries. Fairther south 
the Oulujoki drains the beginning of the north country. Most of 
the streams flow to the Gulf of Bothnia, but there is a broad stretch 
of land in the north and northeast that is drained by rivers flowing 
north across Norway and northeast across the Soviet Union to the 
Arctic Ocean. 

Climate 

Latitude is the principal influence on Finlcind's climate. Because 
of Finland's northern location, winter is the longest season. On 
the average, winter lasts 105 to 120 days in the archipelago and 
180 to 220 days in Lapland. This means that southern portions 
of the country are snow-covered about three months of the year 
and the northern, about seven months. The long winter causes 
about half of the annual 500 to 600 millimeters of precipitation in 
the north to fall as snow. Precipitation in the south amounts to 
about 600 to 700 millimeters annuadly. Like that of the north, it 
occurs cdl through the year, though not so much of it is snow. 

The Atlcintic Ocean to the west and the Eurasian continent to 
the east interact to modify the climate of the country. The warm 
waters of the Gulf Stream and the North Atlantic Drift Current, 
which warm Norway and Sweden, also warm Finland. Westerly 
winds bring the warm air currents into the Baltic areas and to the 
country's shores, moderating winter temperatures, especially in the 
south. These winds, because of clouds associated with weather sys- 
tems accompainying the westerlies, also decrease the amount of sun- 
shine received during the summer. By contrast, the continental high 
pressure system situated over the Eurasian continent counteracts 
the maritime influences, causing severe winters and occasionally 
high temperatures in the summer. 

Demography 

Finland had 250,000 inhabitants in the sixteenth century. As a 
result of wars, the population did not reach the 1 million mark until 
about 1815 (see table 7, Apjjendix A). Mortality remained high even 
in the nineteenth century. The famine of 1867 to 1868, for exam- 
ple, killed 5 to 10 percent of the population, and it was not until 
1880 that there were 2 million Finns. In the last part of the century, 
improved living conditions began to lower the death rate, but a simul- 
taneous fall in the birth rate and increased emigration 



79 



Finland: A Country Study 



AGE-GROUPS 




400 



POPULATION IN THOUSANDS 



Source: Based on information from Nordic Council of Ministers, Nordic Statistical 
Secretariat, Yearbook of Nordic Statistics, 1987, Copenhagen, 1988, 22. 

Figure 9. Population by Age and Sex, 1986 

retarded growth. As a result, shortly before World War I the coun- 
try's inhabitants still numbered only 3 million. A short-lived "baby 
boom" in the first five years after the upheav2ils of World War 
II allowed the population to reach 4 million by 1950. Since then 
the country's population growth has been among the lowest in the 
world. Low birth rates coupled with heavy emigration resulted in 
a population of only 4,937,000 in 1987. The annual birth rate since 
the early 1970s has averaged fewer than 14 births per 1,000 per- 
sons, a rate that has caused demographers to estimate that Fin- 
land's population would peak at just under 5 million by about the 
turn of the century, after which it would decline (see fig. 9). 

At the beginning of the 1980s, Finland's average population den- 
sity, fourteen persons per square kilometer, was the second lowest 
in Western Europe, just behind Norway's thirteen and ahead of 
Sweden's seventeen. Actual population density varied widely, 
however (see fig. 10). The province of Lapland, covering 29.3 per- 
cent of the nation's area but containing only about 4 percent of 
its population, had a population density of about two persons per 
square kilometer, making it one of the earth's emptiest regions. 
Uusimaa, Finland's second smallest province, which contains 
the capital city, Helsinki, accounted for only 3.1 percent of the 



80 



The Society and Its Environment 



national territory; however, it was home for more than 20 percent 
of the country's inhabitants, who hved together at a density of 1 19 
per square kilometer, a figure identical to that of Denmark. The 
provinces of Kymi, Hame, and Turku ja Pori in south-central Fin- 
land, which had a mix of rural and urban areas with economies 
based on both agriculture and industry, were perhaps more truly 
representative of Finnish conditions. During the 1980s, their popu- 
lation densities ranged from thirty to forty persons per square 
kilometer. 

External Migration 

Demographic movement in Finland did not end with the appear- 
ance of immigrants from Sweden in the Middle Ages. Finns who 
left to work in Swedish mines in the sixteenth century began a 
national tradition, which continued up through the 1970s, of settling 
in their neighboring country. During the period of tsarist rule, some 
100,000 Finns went to Russia, mainly to the St. Petersburg area. 
Emigration on a large scale began in the second half of the 
nineteenth century when Finns, along with millions of other 
Europeans, set out for the United States and Canada. By 1980 Fin- 
land had lost an estimated 400,000 of its citizens to these two 
countries. 

A great number of Finns emigrated to Sweden after World War 
II, drawn by that country's prosperity and proximity. Emigration 
began slowly, but, during the 1960s and the second half of the 1970s, 
tens of thousands left each year for their western neighbor. The 
peak emigration year was 1970, when 41,000 Finns settled in 
Sweden, which caused Finland's population actually to fall that 
year. Because many of the migrants later returned to Finland, 
definite figures cannot be calculated, but all told, an estimated 
250,000 to 300,000 Finns became permanent residents of Sweden 
in the postwar period. The overall youthfulness of these emigrants 
meant that the quality of the work force available to Finnish 
employers was diminished and that the national birth rate slowed. 
At one point, every eighth Finnish child was born in Sweden. Fin- 
land's Swedish-speaking minority was hard hit by this westward 
migration; its numbers dropped from 350,000 to about 300,000 
between 1950 and 1980. By the 1980s, a strong Finnish economy 
had brought an end to large-scale migration to Sweden. In fact, 
the overall population flow was reversed because each year several 
thousand more Finns returned from Sweden than left for it. 

Internal Migration 

However significant the long-term effects of external migration 



81 



Finland: A Country Study 




Source: Based on information from Federal Republic of Germany, Statistisches Bundesamt, 
Ldnderbericht Finnland, 1986, Wiesbaden, 1986, 8. 



Figure 10. Population Density by Province, 1981 



82 



The Society and Its Environment 



on Finnish society may have been, migration within the country 
had a greater impact — especially the migration which took place 
between the end of World War II and the mid-1970s, when half 
the population moved from one part of the country to another. 
Before World War II, internal migration had first been a centuries- 
long process of forming settlements ever farther to the north. Later, 
however, beginning in the second half of the nineteenth century 
with the coming of Finland's tardy industrialization, there was a 
slow movement from rural regions toward areas in the south where 
employment could be found. 

Postwar internal migration began with the resettlement within 
Finland of virtuadly all the inhabitants of the parts of Karelia ced- 
ed to the Soviet Union (see The Continuation War, ch. 1). Some- 
what more than 400,000 persons, more than 10 percent of the 
nation's population, found new homes elsewhere in Finland, often 
in the less settled regions of the east and the north. In these regions, 
new land, which they cleared for farming, was provided for the 
refugees; in more populated areas, property was requisitioned. The 
sudden influx of these settlers was successfully dealt with in just 
a few years. One of the effects of rural resetdement was an increase 
in the number of farms during the postwar years, a unique occur- 
rence for industrialized nations of this period (see Agriculture, 
ch. 3). 

It was, however, the postwar economic transformation that 
caused an even larger movement of people within Finland, a move- 
ment known to Finns as the Great Migration (see Economic 
Development, ch. 3). It was a massive population shift from rural 
areas, especially those of eastern and northeastern Finland, to the 
urban, industriadized south (see table 8, Appendix A). People left 
rural regions because the mechanization of agriculture and the fore- 
stry industry had eliminated jobs. The displaced work force went 
to areas where employment in the expanding industrial and ser- 
vice sectors was available. This movement began in the 1950s, but 
it was most intense during the 1960s and the first half of the 1970s, 
assuming proportions that in relative terms were unprecedented 
for a country outside the Third World. The Great Migration left 
behind rural areas of abandoned farms with reduced and aging 
populations, and it allowed the creation of a densely populated 
postindustrial society in the country's south. 

The extent of the demographic shift to the south can be shown 
by the following figures. Between 1951 and 1975, the population 
registered 2in increase of 655,000. During this period, the sm2Jl 
province of Uusimaa increased its population by 412,000, grow- 
ing from 670,000 to 1,092,00; three-quarters of this growth was 



83 



Finland: A Country Study 



caused by settlers from other provinces. The population increase 
experienced by four other southern provinces, the Aland Islands, 
Turku ja Pori, Hame, and Kymi, taken together with that of 
Uusimaa amounted to 97 percent of the country's total popula- 
tion increase for these years. The population increase of the cen- 
tral and the northern provinces accounted for the remaining 3 
percent. Provinces that experienced an actual population loss during 
these years were in the east and the northeast — Pohjois-Karjala, 
Mikkeli, and Kuopio. 

One way of visualizing the shift to the south would be to draw 
a line, bowing slightly to the north, between the port cities of Kotka 
on the Gulf of Finland and Kaskinen on the Gulf of Bothnia. In 
1975 the territory to the south of this line would have contained 
half of Finland's population. Ten years earlier, such a line, drawn 
farther to the north to mark off perhaps 20 percent more area, would 
have encompassed half the population. One hundred years earlier, 
half the population would have been distributed throughout more 
than twice as much territory. Another indication of the extent to 
which Finns were located in the south was that by 1980, approxi- 
mately 90 percent of them lived in the southernmost 41 percent 
of Finland. 

Urbanization 

The Great Migration was also a process of urbanization. 
Mechanization of agriculture and forestry meant fewer jobs in these 
sectors that had traditionally taken the bulk of Finland's work force. 
Redundant workers found new employment in the economically 
burgeoning south. Just before World War II, three out of four Finns 
lived in rural areas; it was not until 1969 that more than half the 
population had come to live in urban communities. The trend con- 
tinued, and by the early 1980s some 60 percent of Finns lived in 
urban areas. The largest urban settlement in Finland was greater 
Helsinki, which, with a population of about 950,000 in the 1980s, 
contained one-fifth of the country's total population. Two of Hel- 
sinki's suburbs, Espoo (established in 1963) and Vantaa (dating 
only from 1972), were, by a wide margin, the country's fourth and 
fifth largest cities. The greater urban areas of the cities of Tam- 
pere and Turku each contained about 250,000 inhabitants. 

Social Structure 

The economic and political transformations that Finland has 
experienced since the last decades of the nineteenth century have 
radically altered the country's social structure. In the first phase 
of this transformation, industrialization expanded the economy. 



84 



The Society and Its Environment 



created hitherto unknown occupational groups, and forced the old 
bureaucratic and clerical elite to share power and prestige with a 
new entrepreneurial class. The political transformation established 
a democratic republic in which parties representing workers and 
farmers successfully contended for the highest public offices. After 
World War II, the two processes of transformation quickened. In 
one generation, the manner in which Finns lived and earned their 
livelihood changed in an unprecedented way. An essentially rural 
society moved to the city; farmers, for centuries the most numer- 
ous class, ceded this position to white-collar workers; and prosperity 
replaced poverty. 

Occupational and Wage Structure 

Finland's export-dependent economy continuously adapted to 
the world market; in doing so, it changed Finnish society as well. 
The prolonged worldwide boom, beginning in the late 1940s and 
lasting until the first oil crisis in 1973, was a chadlenge that Fin- 
land met and from which it emerged with a highly sophisticated 
and diversified economy, including a new occupational structure 
(see Economic Development, ch. 3). Some sectors kept a fairly con- 
stant share of the work force. Transportation and construction, for 
example, each accounted for between 7 and 8 percent in both 1950 
and 1985, and manufacturing's share rose only from 22 to 24 per- 
cent; however, both the commercial and the service sectors more 
than doubled their share of the work force, accounting, respectively, 
for 21 and 28 percent in 1985. The greatest change was the decline 
of the economically active population employed in agriculture and 
forestry, from approximately 50 percent in 1950 to 10 percent in 
1985. The exodus from farms and forests provided the manpower 
needed for the growth of other sectors. 

Studies of Finnish mobility patterns since World War II have 
confirmed the significance of this exodus. Sociologists have found 
that people with a farming background were present in other 
occupations to a considerably greater extent in Finland than in other 
West European countries. Finnish data for the early 1980s showed 
that 30 to 40 percent of those in occupations not requiring much 
education were the children of farmers, as were about 25 percent 
in upper-level occupations, a rate two to three times that of France 
and noticeably higher than that even of neighboring Sweden. Fin- 
land also differed from the other Nordic countries in that the gener- 
ational transition from the rural occupations to white-collar positions 
was more likely to be direct, bypassing manual occupations. 

The most important factor determining social mobility in Fin- 
land was education. Children who attained a higher level of 



85 



Finland: A Country Study 

education than their parents were often able to rise in the hierar- 
chy of occupations. A triphng or quadrupling in any one genera- 
tion of the numbers receiving schooling beyond the required 
minimum reflected the needs of a developing economy for skilled 
employees. Obtaining advanced training or education was easier 
for some than for others, however, and the children of white-collar 
employees still were more likely to become white-collar employees 
themselves than were the children of farmers and blue-collar 
workers. In addition, children of white-collar professionals were 
more likely than not to remain in that class. 

The economic transformation also altered income structure. A 
noticeable shift was the reduction in wage differentials. The 
increased wealth produced by an advanced economy was distributed 
to wage earners via the system of broad income agreements that 
evolved in the postwar era (see Industrial Relations, ch. 3). 
Organized sectors of the economy received wage hikes even greater 
than the economy's growth rate. As a result, blue-collar workers' 
income came, in time, to match more closely the pay of lower-level 
white-collar employees, and the income of the upper middle class 
declined in relation to that of other groups. 

The wage structure of the 1 980s contrasted sharply with that of 
1900. At the turn of the century, the pay of a senior government 
official was many times greater than that of an industrial worker, 
and households headed by professionals customarily employed ser- 
vants. By the 1980s, the household of a university-educated profes- 
sional had an average income not quite twice that of a manual 
worker in the farming or forestry sector. According to the Central 
Statistical Office of Finland, if the average household income is 
measured at 100 in 1984, that of a professional household is 169; 
of a salaried employee, 118; of a construction worker, 112; and 
of an ordinary service sector employee, 104. Among households 
with incomes below the average are those of farm and forestry 
workers, with an average income measured at 92; those receiving 
unemployment benefits at 73; and those retired at 44. 

Despite a more even distribution of income, Finnish government 
statistics showed that a considerable portion of taxable income was 
earned by small segments of the population. In 1985 the top 10 
percent of taxpayers earned 26.9 percent of taxable income, and 
the top 20 percent earned 43.7 percent of -income. The bottom 10 
percent of taxpayers earned only 0.5 percent of taxable income; 
the bottom 20 percent, only 3 percent. These figures had remained 
stable since at least the late 1970s, and they were unlikely to change 
greatly by the early 1990s, as Finnish taxes remained relatively 
modest compared with those of other West European countries. 



86 




Saimaa, a system of interconnected lakes covering 1, 000 square 

kilometers in eastern Finland 
Courtesy Embassy of Finland, Washington 

Although Finland's income distribution was the most unequal of 
the five Nordic countries, it did not differ greatly from its neigh- 
bors. Sweden, for example, had the most equal distribution, with 
the top 20 percent earning 38.1 percent of taxable income, and 
the bottom 20 percent, 5.3 percent. 

Class Structure 

For centuries Finnish society consisted of the nobility, clergy, 
burghers, and peasants. The nineteenth century saw the eclipse 
of the nobility and clergy and, with the coming of industrializa- 
tion, the formation of socially significant entrepreneurial and work- 
ing classes. The civil war and subsequent periods of repression 
helped to create hostile relations among labor, land, and capital, 
and in the interwar period Finland was a country marked by deep 
social fissures along class and language lines. The common national 
goals of World War II closed some wounds, but it was not until 
the coming of consensus politics in the second half of the 1960s 
that constructive relations among competing social groups became 
possible. An unprecedented prosperity, widely distributed through 
incomes agreements and a Nordic-style welfare system, served to 
integrate all groups into society; a more open education system, 
coupled with the internationally pervasive consumer culture of the 



87 



Finland: A Country Study 



postwar era, planed away many differences of taste and conduct 
related to class. 

Finnish scholars have examined the composition of the new con- 
sensus society, and their varied findings have prompted serious dis- 
cussions of its class makeup. Among many issues debated have been 
the definition of the working class, the extent to which it has been 
affected by a process of "embourgeoisement," and the constitu- 
tion of the ruling elite, if any, that has steered the country. One 
noted Finnish sociologist, Matti Alestalo, familiar with academic 
studies in these areas, divided Finnish society of the 1980s into six 
classes: farmers, working class, petite bourgeoisie, lower middle 
class, upper middle class, and upper class. 

For Alestalo, the two most striking changes in Finland's class 
structure after World War II were the steep drop in the size of the 
farming population and the great expansion of the lower middle 
class. During the early 1950s, the number of those working in 
agriculture actually increased, but thereafter it fell steadily. By 1980 
the sector was about one-quarter of its size thirty years earlier, and 
it consisted almost entirely of farm owners and their families because 
the number of hired agricultural workers had dwindled. The farmers 
who remained enjoyed a higher standard of living because it was 
the smaller and poorer farms that had been abandoned. Another 
reason for farmers' new prosperity was that they were a highly 
organized and homogeneous class that successfully lobbied for 
government policies that benefited them. Farmers differed from 
other classes in that they were, to a far higher degree, self-recruiting; 
about 80 percent of farmers were the offspring of farmers. The 
rationalization of agriculture made small businessmen out of most 
farmers, but farmers differed from other owners of small enter- 
prises in that they passed on to their children something that was 
more a way of life than a business. 

Alestalo classified as a worker anyone employed for primarily 
manual work, and he included in this class some white-collar wage 
earners whom others judged to belong to the lower middle class. 
According to his calculations, the working class had accounted for 
about 50 percent of the economically active work force during the 
entire postwar period, but the sectors in which it was employed 
had changed. The share of workers employed in agriculture and 
forestry had dropped from 22 to 4 percent by 1980, while the share 
active in manufacturing and services had increased to 60 and to 
26 percent, respectively. Workers' living standards had improved 
greatly — more than those of other groups — since the war, but even 
in the 1980s workers still had poorer health and less job security 
than other classes. They were also housed more poorly, and one 



88 



The Society and Its Environment 



of their primary concerns was to acquire homes of their own. By 
the 1980s, Finnish workers had become much more integrated into 
society than they had been in the immediate postwar period, but 
they still identified strongly with their labor unions and with the 
parties that had traditionally represented them. Although workers 
no longer lived in the isolated enclaves of the interwar period, 
Alestalo believed it would be premature to say that they had be- 
come part of the middle class. 

Finland's petite bourgeoisie of shopowners and small 
entrepreneurs had never been an economically important class. It 
had declined slowly in size, beginning in the 1950s, until by 1980 
it accounted for only 5 percent of the work force. Many small shops 
operated by this class had closed because of the growth of large 
retail firms. Many small grocery stores, for example, had gone out 
of business. There was little intergenerational stability in this class 
because many of its members came from outside it. 

Alestado divided the large group engaged in nonmanu2il, white- 
collar occupations into a lower middle class and an upper middle 
class. Educational level, recruitment criteria, complexity of tasks, 
level of income, and commitment to the organization were among 
the factors that determined to which of these two classes a person 
belonged. Both classes had grown since the war, doubling in size 
between 1960 and 1980, but the lower middle class share of the 
total work force in 1980 amounted to 24 percent, making it the 
second largest class in Finland and dwarfing the 8 percent of the 
upper middle class. Both levels of the middle class had many mem- 
bers born in other classes, but the lower middle class had more, 
one-third having a farming background and another third coming 
from the working class. Women dominated in the lower middle 
class, constituting 60 percent of its membership in 1960 and 70 
percent in 1980, an indication of their heavy employment in lower- 
level service- sector positions such as those of office workers, elemen- 
tary school teachers, and nurses. 

According to Alestalo, the country's upper class accounted for 
about 1 percent of the economically active population; it was made 
up of the owners, directors, or managers of large industrisd con- 
cerns, banks, and commercial institutions in the private sector, as 
well as the heads of large state companies and agencies, and senior 
civil servants in the public sector. Some members of the country's 
upper class inherited their wealth or position. In the postwar era, 
however, most appeared to be hired professionals. Much of the 
membership of the upper class came from the upper reaches of Fin- 
nish society, but several factors resulted in its having a more het- 
erogeneous composition than earlier — the coming to power of 



89 



Finland: A Country Study 



socialist parties with leaderships from various classes, the common 
practice of politicizing senior civil service appointments, and the 
greater importance of state institutions. 

Family Life 

The profound demographic and economic changes that occurred 
in Finland after World War II affected the Finnish family. Fami- 
lies became smaller, dropping from an average of 3.6 persons in 
1950 to an average of 2.7 by 1975. Family composition did not 
change much in that quarter of a century, however, and in 1975 
the percentage of families that consisted of a man and a woman 
was 24.4; of a couple and children, 61 .9; of a woman with offspring, 
11.8; of a man and offspring, 1.9. These percentages are not 
markedly different from those of 1950. Chzmge was seen in the num- 
ber of children per fgimily, which fell from an average of 2.24 in 
1950 to an average of 1 .7 in the mid-1980s, and large families were 
rare. Only 2 percent of families had four or more children, while 
51 percent had one child; 38 percent, two children; and 9 percent, 
three children. The number of Finns under the age of 18 dropped 
from 1.5 million in 1960 to 1.2 million in 1980. 

Marriage 

Attitudes toward marriage have changed substantially since 
World War II. Most obvious was the declining marriage rate, which 
dropped from 8.5 marriages per 1,000 Finns in 1950 to 5.8 in 1984, 
a decline great enough to mean a drop also in absolute numbers. 
In 1950 there were 34,000 marriages, while in 1984 only 28,500 
were registered, despite a growth in population of 800,000. An 
explanation for the decline was that there was an unprecedented 
number of unmarried couples. Since the late 1960s, the practice 
of cohabitation had become increasingly common, so much so that 
by the late 1970s most marriages in urban areas grew out of what 
Finns called "open unions." In the 1980s, it was estimated that 
about 8 percent of couples who lived together, approximately 
200,000 people, did so without benefit of marriage. Partners of such 
unions usually married because of the arrival of offspring or the 
acquisition of property. A result of the frequency of cohabitation 
was that marriages were postponed, and the average age for mar- 
riage, which had been falling, began to rise in the 1970s. By 1982 
the average marriage age was 24.8 years for women and 26.8 years 
for men, severzJ years higher for both sexes than had been true 
a decade earlier. 

The overwhelming majority of Finns did marry, however. About 
90 percent of the women had been married by the age of forty, 



90 



The Society and Its Environment 



and spinsterhood was rare. A shortage of women in rural regions, 
however, meant that some farmers were forced into bachelorhood. 

While the number of marriages was declining, divorce became 
more common, increasing 250 percent between 1950 and 1980. 
In 1952 there were 3,500 divorces. The 1960s saw a steady increase 
in this rate, which averaged about 5,000 divorces a year. A high 
of 10,191 was reached in 1979; afterwards the divorce rate stabi- 
lized at about 9,500 per year during the first half of the 1980s. 

A number of factors caused the increased frequency of divorce. 
One was that an increasingly secularized society viewed marriage, 
more often than before, as an arrangement that could be ended 
if it did not satisfy its partners. Another reason was that a gradu- 
ally expanding welfare system could manage an ever greater por- 
tion of the family's traditional tasks, and it made couples less 
dependent on the institution of marriage. Government provisions 
for parental leave, child allowances, child care programs, and much 
improved health and pension plans meant that the family was no 
longer essential for the care of children and aged relatives. A fur- 
ther cause for weakened family and marital ties was seen in the 
unsettling effects of the Great Migration and in the economic trans- 
formation Finland experienced during the 1960s and the 1970s. 
The rupture of established social patterns brought uncertainty and 
an increased potential for conflict into personal relationships. 

Status of Women 

After examining the position of women around the world, the 
Washington-based Population Crisis Committee reported in 1988 
that Finland, slightly behind top-ranked Sweden and just ahead 
of the United States, was one of the very best places in which a 
woman could live. The group reached this conclusion after examin- 
ing the health, educational, economic, and legal conditions that 
affect women's lives. 

When compared with women of other nations, Finnish women, 
who accounted for just over 50 percent of the population in the 
mid-1980s, did have a privileged place (see fig. 10). They were 
the first in Europe to gain the franchise, and by the 1980s they 
routinely constituted about one-third of the membership of the 
Eduskunta (parliament) and held several ministerial posts. In the 
1980s, about 75 percent of adult women worked outside the home; 
they made up about 48 percent of the work force. Finnish women 
were as well educated as their male counterparts, and the number 
of women studying at the university level was slightly higher than 
the number of men. In addition to an expanding welfare system, 
which since World War II had come to provide them with 



91 



Finland: A Country Study 



substantial assistance in the area of child-bearing and child-rearing, 
women had made notable legislative gains that brought them closer 
to full equality with men. 

In 1972 the Council for Equality was established to advise law- 
makers on methods for realizing full legal equality for women. In 
1983 legislation arranged that both parents were to have equal rights 
for custody of their children. A year later, women were granted 
equal rights in the establishment of their children's nationality. 
Henceforth any child born of a Finnish woman would have Fin- 
nish citizenship. After a very heated national debate, legislation 
was passed in 1985 that gave women an equal right to decide what 
surname or surnames they and their children would use. These 
advances were capped by a law that went into effect in early 1987 
forbidding any discrimination on the basis of sex and providing 
protection against it. Once these laws were passed, Finnish authori- 
ties signed the United Nations Convention on the Elimination of 
All Forms of Discrimination Against Women, in 1986. 

In a number of areas, however, the country's small feminist 
movement maintained that the circumstances in which Finnish 
women lived needed to be improved. Most striking was the dis- 
parity in wages. Although women made up just under half the work 
force and had a tradition of working outside the home, they earned 
only about two-thirds of the wages paid to men. Occupations in 
which women predominated, such as those of retail and office per- 
sonnel, were poorly paid in contrast to those in which men con- 
stituted the majority. Despite the sexes' equal educational 
attainments, and despite a society where sexual differentiation 
played a smaller role than it did in many other countries, occupa- 
tional segregation in Finland was marked. In few of the twenty 
most common occupations were the two sexes equally represented. 
Only in occupations relating to agriculture, forestry, and school 
teaching was a rough parity approached, and as few as 6 percent 
of Finns worked in jobs where 40 to 60 percent of workers were 
of the opposite sex. Studies also found that equal educational lev- 
els did not — in any category of training — prevent women's wages 
from lagging behind those paid to men. Women tended to occupy 
lower positions, while males were more often supervisors or 
managers. This was the case everywhere, whether in schools or 
universities, in business, in the civil service, or in politics at both 
the local level and the national level. 

In addition to their occupying secondary position in the work- 
place, women had longer workdays because they performed a great- 
er share of household tasks than did men. On the average, their 
workweek outside the home was several hours shorter than 



92 



The Society and Its Environment 



men's because a greater portion of them were employed only part- 
time or worked in the service sector where hours were shorter than 
they were in manufacturing. Studies have found, however, that 
women spent about twice as much time on housework as men — 
about three hours and forty minutes a day, compared with one hour 
and fifty minutes for men. Men did twice as many household repairs 
and about an equal amount of shopping, but they devoted only 
one-third to one-fourth as much time to cleaning, cooking, and 
caring for children. Given that the bulk of family chores fell to 
women, and that they were five times more likely than men to head 
a single-parent family, the shortcomings of Finland's child day- 
care system affected women more than men. 

The Equality Law that went into effect in 1987 committed the 
country to achieving fiiU equality for women. In the late 1980s, 
there was a timetable listing specific goals to be achieved during 
the remainder of the twentieth century. The emphasis was to be 
equality for everyone, rather than protection for women. Efforts 
were undertaken not only to place women in occupations domi- 
nated by males, but also to bring males into fields traditionally 
believed to belong to the women's sphere, such as child care and 
elementary school teaching. Another aim was for women to occupy 
a more equal share of decision-making positions. 

Minority Groups 

Compared with many countries, Finland was quite homoge- 
neous. There were few foreigners, and the ones who were present 
were usually white-collar employees required for commercial rea- 
sons. Very few persons of other races were seen on the nation's 
streets, and only a handful of refugees were granted asylum. Finns 
were open about their desire to avoid admitting workers from dis- 
tant southern countries and hence to avoid the kinds of situations 
that had led to minor racial incidents in neighboring Sweden and 
Denmark, let alone those that had caused the serious social problems 
experienced by Britain. 

Finland did have one significant minority, the Swedish- speaking 
Finns, who had been in the country for more than 1 ,000 years and 
who, for centuries, had been the source of its ruling elite. 
Nineteenth-century nationalism, some fierce struggles in the twen- 
tieth century, and changing demographic patterns had deprived 
this group of its traditional dominance, but law and compromise 
had allowed the Swedish- speaking Finns a secure and peaceful place 
within Finnish society. Two smaller minorities had not been suc- 
cessfully assimilated. One, the Lapps, was descended from the origi- 
nal inhabitants of the land; the other, the Gypsies, was a much 



93 



Finland: A Country Study 

later addition. The former lived mostly in the high north; the lat- 
ter were found throughout the country. Neither group was a threat 
to Finnish society, but both occasionally posed problems for social 
workers, and their treatment at the hands of their fellow Finns was 
sometimes cause for regret. Also present in Finland were tiny Jewish 
and Muslim communities, both of which had roots going back into 
the nineteenth century. 

Lapps 

The oldest known inhabitants of Finland are the Lapps, who were 
already setded there when the Finns arrived in the southern part 
of the country about 2,000 years ago. The Lapps were distantly 
related to the Finns, and both spoke a non-Indo-European language 
belonging to the Finno-Ugric family of languages. Once present 
throughout the country, the Lapps gradually moved northward 
under the pressure of the advancing Finns. As they were a nomadic 
people in a sparsely settled land, the Lapps were always able to 
find new and open territory in which to follow their traditional 
activities of hunting, fishing, and slash-and-burn agriculture. By 
the sixteenth century, most Lapps lived in the northern half of the 
country, and it was during this period that they converted to Chris- 
tianity. By the nineteenth century, most of them lived in the parts 
of Lapland that were still their home in the 1980s. The last major 
shift in Lapp settlement was the migration westward of 600 Skolt 
Lapps from the Petsamo region after it was ceded to the Soviet 
Union in 1944. A reminder of their eastern origin was their 
Orthodox faith; the remaining 85 percent of Finland's Lapps were 
Lutheran. 

About 90 percent of Finland's 4,400 Lapps lived in the munici- 
palities of Enontekio, Inari, cind Utsjoki, and in the reindeer 
herding-area of Sodankyla. According to Finnish regulations, any- 
one who spoke the Lapp language, Sami, or who had a relative 
who was a Lapp, was registered as a Lapp in census records. Fin- 
nish Lapps spoke three Sami dialects, but by the late 1980s perhaps 
only a minority actually had Sami as their first language. Lapp 
children had the right to instruction in Sami, but there were few 
qualified instructors or textbooks available. One reason for the scar- 
city of written material in Sami is that the three dialects spoken 
in Finland made agreement about a common orthography difficult. 
Perhaps these shortcomings explained why a 1979 study found the 
educational level of Lapps to be considerably lower than that of 
other Finns. 

Few Finnish Lapps actually led the traditional nomadic life pic- 
tured in school geography texts and in travel brochures. Although 



94 



Lapps in traditional dress 
Courtesy Embassy of Finland, 
Washington 



many Lapps living in rural regions of Lapland earned some of their 
livelihood from reindeer herding, it was estimated that Lapps owned 
no more than one-third of Finland's 200,000 reindeer. Only 5 per- 
cent of Finnish Lapps had the herds of 250 to 300 reindeer needed 
to live entirely from this kind of work. Most Lapps worked at more 
routine activities, including farming, construction, and service 
industries such as tourism. Often a variety of jobs and sources of 
income supported Lapp families, which were, on the average, twice 
the size of a typical Finnish family. Lapps adso were aided by old- 
age pensions and by government welfare, which provided a greater 
share of their income than it did for Finns as a whole. 

There have been many efforts over the years by Finnish authori- 
ties to safeguard the Lapps' culture and way of life and to ease 
their entry into modern society. Officials created bodies that dealt 
with the Lapp minority, or formed committees that studied their 
situation. An early body was the Society for the Promotion of Lapp 
Culture, formed in 1932. In 1960 the government created the 
Advisory Commission on Lapp Affairs. The Lapps themselves 
formed the Samii Litto in 1945 and the Johti Sabmelazzat, a more 
aggressive organization, in 1968. In 1973 the government arranged 
for elections every four years to a twenty-member Sami Parlamenta 
that was to advise authorities. On the international level, there was 
the Nordic Sami Council of 1956, and there has been a regularly 
occurring regional conference since then that represented — in 



95 



Finland: A Country Study 

addition to Finland's Lapps — Norway's 20,000 Lapps, Sweden's 
10,000 Lapps, and the 1,000 to 2,000 Lapps who remained in the 
Kola Peninsula in the Soviet Union. 

Swedish-speaking Finns 

The largest minority group in Finland was the Swedish- speaking 
Finns, who numbered about 250,000 in the late 1980s. The first 
evidence of their presence in the country, dating from the eighth 
century, comes from the Aland Islands. After the thirteenth cen- 
tury, colonization from Sweden began in earnest, and within two 
centuries there was a band of territory occupied by Swedish speakers 
that ran along the western and the southern coasts and had an aver- 
age width of about thirty kilometers (see fig. 11). Cycles of Fin- 
nish and Swedish assimilation have changed the linguistic makeup 
of this strip of land. In Ostrobothnia, for example, the area of Swed- 
ish settlement extended inland as much as sixty kilometers and still 
existed in the late 1980s, while other areas had eventually reverted 
to being once again overwhelmingly inhabited by Finnish speak- 
ers. By the end of the nineteenth century, the areas of Swedish 
settlement had shrunk to basically what they were in the second 
half of the 1980s: Ostrobothnia, the Aland Islands, and a strip along 
the southern coast that included the capital (see fig. 12). The set- 
tlers from Sweden gradually lost contact with their relatives in the 
old country and came to regard Finland as their country. They 
were distinguished from other Finns only by their language, Swed- 
ish, which they retained even after hundreds of years of separa- 
tion from Sweden. 

Although most Swedish-speaking Finns worked as farmers and 
fishermen, for centuries they also made up the country's govern- 
ing elite. Even after the country was ceded to Russia in 1809, the 
aristocracy and nearly all those active in commerce, in the courts, 
and in education had Swedish as their native language. The coun- 
try's bureaucracy did virtually all its written work in Swedish. Fin- 
nish speakers who desired to enter these groups learned Swedish. 
Only the clergy used Finnish on a regular basis, for they dealt with 
the bulk of the population who, for the most part, knew only that 
language. There were no campaigns to force Swedish on Finnish 
speakers, however, and the problem of language as a social issue 
did not exist during the period of Swedish rule. 

Swedish retained its primacy until the second half of the 
nineteenth century, when, as a result of budding nationalism, it 
was gradually displaced by Finnish. A good many of the strongest 
advocates of Finnish nationalism were Swedish speakers who used 
their own language in the patriotic pamphlets and journals of the 



96 



The Society and Its Environment 



time because few of them could write Finnish. By the end of the 
century, the nationaUst movement had been successful in foster- 
ing the birth of Finnish as a written language and in bringing about 
the formation of an educated Finnish- speaking elite. Numbering 
350,000 and constituting 13 percent of the country's population 
in 1900, Swedish- speaking Finns were still disproportionately in- 
fluential and wealthy, but they were no longer dominant in the 
country of their birth. 

Independent Finland's new Constitution protected the Swedish- 
speaking minority, in that it made both Finnish and Swedish na- 
tional languages of equal official status, stipulating that a citizen be 
able to use either language in courts and have government docu- 
ments relating to him or her issued in his or her language, and that 
the cultural and economic needs of both language groups be treated 
equally. The Language Act of 1922 covered many of the practical 
questions engendered by these constitutional rights. Despite these 
legal provisions, however, there were still currents of Finnish opin- 
ion that wished to see a curtailment of the Swedish- speaking minori- 
ty 's right to protect its cultural identity. Attempts at Finnicization 
failed, however, and the advent of the nationzd crisis of World War 
II submerged disagreements about the language issue. Since the 
war, there have been occasional squabbles about practical meas- 
ures for realizing the minority's economic and cultural rights, but 
none about the inherent value of the policy of equality. 

The Language Act of 1922, and its subsequent revisions, 
arranged for the realization of the rights of the Swedish- speaking 
minority. The basic units for protecting and furthering the exer- 
cise of these rights were the self-governing municipalities. After 
each ten-year census, Finland's nearly 500 municipalities were clas- 
sified as either unilingual or bilingual with a majority language. 
In the 1980s, there were 461 municipsdities: 396 Finnish- speaking; 
21 bilingual with a Finnish- speaking majority; 24 Swedish-speaking; 
20 bilingual with Swedish as the majority language. A municipal- 
ity was bilingual if the number of speakers of the minority language 
exceeded either 3,000 or 8 percent of its population. If a munici- 
pality had been classified as bilingual, it could not revert to unilin- 
gual status until the minority population declined to less than 6 
percent. 

Language classification had important consequences for the in- 
habitants of a municipality, for it determined which language was 
to be used for government business. In bilingual municipalities, all 
documents affecting the general public — tax forms, for example — 
had to be published in both languages. In addition, national 
and local government officials had to be bilingual — a requirement 



97 



Finland: A Country Study 




Source: Based on information from Erik Allardt and Karl Johan Miemois, Roots 
Both in the Center and the Periphery: The Swedish Speaking Population in Finland, Hel- 
sinki, 1979, 7. 



Figure 11. Areas Inhabited by Swedish-speaking Finns up to 1910 



not cJways met, however — and public notices and road signs had 
to be in both languages. In unilingual communities this was not 
the case. Documents relating directly to an individual case could 
be translated, but otherwise official business was transacted in the 
municipality's language. If someone were involved in a court case, 
however, and did not know the prevailing language, translation 
would be provided. 

The method used to classify municipalities had to be regarded 
as successful because, although the overwhelming majority of 
municipalities were unilingual Finnish- speaking communities, only 
4 percent of the Swedish- speaking minority lived in municipalities 
where their language was not used. Finnish- speaking Finns fared 



98 



The Society and Its Environment 



even better, for less than 1 percent of them Uved where their lan- 
guage was not used officially. Some of the Swedish speakers who 
lived apart from their fellows did so voluntarily because they had 
management positions at factories and plants in regions that were 
nearly entirely Finnish-speaking areas. Because they were educated, 
these managers knew Finnish. They were also representatives of 
the tradition oi ''brukssvenskar^^ (literadly, "factory Swedes"), and 
were sometimes the only Swedish speakers their brother Finns knew. 

On the national level, sJl laws and decrees had to be issued in 
both languages, and the Swedish- speaking minority had the right 
to have Swedish-language programs on the state radio and televi- 
sion networks. Swedish-language schools had to be established 
wherever there was a sufficient number of pupils. There were several 
Swedish-language institutions of higher learning, and a specified 
number of the professorial chairs at the University of Helsinki was 
reserved for Swedish speakers, as was one brigade in the army. 
A drawback for the Swedish-speaking minority, though, was that 
because of its small size, the nationzd government could not, for 
practical reasons, publish in Swedish all parliamentary delibera- 
tions, committee reports, and officiad documents. 

The Swedish- speaking minority was well represented in various 
sectors of society. The moderate Swedish People's Party (Svenska 
Folkpartiet — SFP) got the votes of most Swedish speakers, with 
the exception of workers who more often than not voted for sociadist 
parties. The SFP polled enough support to hold a number of seats 
in the Eduskunta that usuadly matched closely the percentage of 
Swedish speakers in the country's totad population. It very often 
had ministers in the cabinet as well (see The Swedish People's Party, 
ch. 4). An unofficiad special body, the Swedish People's Assembly 
(Svenska Finlands Folkting), representing adl members of the 
minority, functioned in an advisory capacity to regular governing 
institutions. Most national organizations, whether economic, aca- 
demic, social, or religious, had branches or separate equivalents 
for Swedish speakers. Because of its long commercial and mari- 
time traditions, the Swedish- speaking minority was disproportion- 
ately strong in some sectors of the financial community and the 
shipping industry. In general, however, with the exception of the 
upper middle class, where there were more Swedish speakers than 
usu2d, the class distribution of the minority matched fairly closely 
that of the larger community. 

The size of the Swedish-speaking minority increased fairly steadily 
until 1940, when it numbered 354,000 persons, or 9.6 percent of 
the country's total population. Since then it has declined, drop- 
ping to 296,000, or 6.1 percent of the population, in 1987. In 



99 



Finland: A Country Study 




Source: Based on information from Erik Allardt and Karl Johan Miemois, 
The Swedish-Speaking Minority in Finland, Helsinki, 1981, 56. 



Figure 12. Language Areas of Finland, 1976 

relative terms, however, it has been in decline for centuries, drop- 
ping from 17.5 percent in 1610, and it was expected to go below 
6 percent by the end of the twentieth century. The decline stemmed 
from a variety of factors: a slighdy lower birth rate than the rest 
of the population during some periods; a greater rate of emigra- 
tion to the United States before World War I; a large loss of some 
50,000 persons who settled permsinently in Sweden in the decades 
after World War II; and frequent marriages with Finnish speakers. 

By the 1980s, more than half the marriages of Swedish-speaking 
Finns were to persons from outside their language group. In urban 
areas, especially in Helsinki, the rate was over 60 percent. This 
was not surprising because the members of the minority group were 
usually bUingual, and there were no legal constraints (although there 
were sometimes social and familial constraints) against marrying 



100 



The Society and Its Environment 



those speaking the majority language. The bihnguaUsm of the 
minority was caused by compulsory schooling in the majority lan- 
guage from the third school year on, and from living in a society 
where, with the exception of some rural areas, speaking only Swed- 
ish was a serious handicap because the majority group usually had 
a poor knowledge of Swedish, despite compulsory study of it for 
several years. Swedish- speaking Finns were easily able then to cross 
from one language group to another. However highly they valued 
their mother tongue and their group's cultural identity, they were 
not bound by them when selecting friends or spouses. A survey 
of the late 1970s found, for example, that Swedish- speaking natives 
of Helsinki felt they had more in common with natives of their city 
who did not speak their language than they did with Swedish speak- 
ers from other regions. More often than not, Swedish-speaking 
Finns married outside their group. These marriages posed a danger 
to their language community in that the resulting offspring were 
usually registered as speakers of the majority language, even when 
they were truly bilingual. Thus the Finnish practice of counting 
speakers of a language by the principle of personality, that is on 
an individual basis, rather than by the principle of territoriality, 
as was done only for the Aland Islands, was leading to a decline 
in the size of the Swedish- speaking minority. 

Gypsies 

Gypsies have been present in Finland since the second half of 
the sixteenth century. With their unusual dress, unique customs, 
and specialized trades for earning their livelihood, Gypsies have 
stood out, and their stay in the country has not been an easy one. 
They have suffered periodic harassment from the hands of both 
private citizens and public officials, and the last of the special laws 
directed against them was repealed only in 1883. Even in the second 
half of the 1980s, Finland's 5,000 to 6,000 Gypsies remained a dis- 
tinct group, separated from the general population both by their 
own choice and by the fears and the prejudices many Finns felt 
toward them. 

Finnish Gypsies, like Gypsies elsewhere, chose to live apart from 
the dominant societal groups. A Gypsy's loyalty was to his or her 
family and to Gypsies in general. Marriages with non-Gypsies were 
uncommon, and the Gypsies' own language, spoken as a first lan- 
guage only by a few in the 1980s, was used to keep outsiders away. 
An individual's place within Gypsy society was largely determined 
by age and by sex, old, males having authority. A highly developed 
system of values arid a code of conduct governed a Gypsy's 
behavior, and when Gypsy sanctions, violent or not, were imposed, 



101 



Finland: A Country Study 

for example via "blood feuds," they had far more meaning than 
any legal or social Scinctions of Finnish society. 

Unlike the Lapps, who lived concentrated in a single region, the 
Gypsies lived throughout Finland. While most Lapps wore ordi- 
nary clothing in their everyday life, Gypsies could be identified 
by their dress; the men generally wore high boots and the women 
almost always dressed in very full, long velvet skirts. Like most 
Lapps, however, Gypsies also had largely abandoned a nomadic 
way of life and had permanent residences. Gypsy men had for cen- 
turies worked as horse traders, but they had adapted themselves 
to postwar Finland by being active as horse breeders and as deal- 
ers in cars and scrap metal. Women continued their traditional 
trades of fortune telling and handicrafts. 

Since the 1960s, Finnish authorities have undertaken measures 
to improve the Gypsies' standard of living. Generous state finan- 
cial arrangements have improved their housing. Their low 
educational level (an estimated 20 percent of adult Gypsies could 
not read) was raised, in part, through more vocational training. 
A permanent Advisory Commission on Gypsy Affairs was set up 
in 1968, and in 1970 racial discrimination was outlawed through 
an addition to the penal code. The law punished blatant acts such 
as barring Gypsies from restaurzmts or shops or subjecting them 
to unusual surveillance by shopkeepers or the police. 

Jewish and Muslim Communities 

In the 1980s, there were about 1,300 Jews in Finland, 800 of 
whom lived in Helsinki and most of the remainder of whom lived 
in Turku. During the period of Swedish rule, Jews had been for- 
bidden to live in Finland. Once the country became part of the 
Russian Empire, however, Jewish veterans of the tsarist army had 
the right to setde anywhere they wished within the empire. Although 
constrained by law to follow certain occupations, mainly those con- 
nected with the sale of clothes, the Jewish community in Finland 
was able to prosper, and in 1890 it numbered about 1,000. Fin- 
nish independence brought complete civil rights, and during the 
interwar period there were some 2,000 Jews in Finland, most of 
them living in urban areas in the south. During World War II, 
Finnish authorities refused to deliver Jews to the Nazis, and the 
country's Jewish community survived the war virtually intact. By 
the 1980s, assimilation and emigration had significantly reduced 
the size of the community, and it was only with some difficulty 
that it maintained synagogues, schools, libraries, and other perti- 
nent institutions. 

The Muslim community in Finland was even smaller than the 



102 



The Society and Its Environment 



Jewish community; it numbered only about 900, most of whom 
were found in Helsinki. The Muslims first came to Finland from 
Turkey in the mid-nineteenth century and have remained there 
ever since, active in commerce. Like their Jewish counterparts, Fin- 
nish Muslims, because of their small number, have had difficulty 
maintaining all the institutions needed by a social group. 

Religion 

The right to worship freely is guaranteed by Article 8 and Arti- 
cle 9 of the Constitution of 1919 and by the Freedom of Religion 
Act that went into effect in 1923. In the 1980s, there were about 
thirty registered religions in the country, all of which met the mini- 
mum requirement of having at least thirty followers. Despite this 
wealth of religions, the country's religious life was dominated by 
one of its two state churches, the Lutheran Church of Finland, which 
had nearly 90 percent of the population as members. The other 
state church, the Orthodox Church of Finland, had a membership 
of about 1 percent of the population. The remaining churches or 
religions had 2 percent of the people in their congregations. Fol- 
lowers of the sm2iller churches included Jews, Muslims, Roman 
Catholics, a variety of Protestants, Mormons, Christian Scientists, 
and converts to eastern religions. Seven percent belonged to no 
church. 

Role of Religion 

Religion was a part of public life in a variety of ways. The celebra- 
tion of the gaining of Finnish independence on December 6 had 
a religious component, as did the annual opening of the Eduskunta. 
There were three religious holidays when public entertainments 
were not permitted. The state churches kept the official records 
of their members' civil status, and the vast majority of marriages 
were performed in the state churches and had the same leg2il sta- 
tus as a civil ceremony. Church members paid a church tax that 
was collected and paid to the churches by state authorities. Per- 
sons wishing to leave one of the state churches had to do so for- 
madly, and records of this decision were maintained. Religious 
instruction was a regular part of the schools' curricula, and chil- 
dren wishing to be excused from it had to request the right to take 
a substitute course. The armed forces had chaplains, the highest 
of whom was a bishop, and their services were, in practice, usual- 
ly obligatory for recruits. Chaplains' salaries were paid by the state, 
as were those of the higher clergy of the two state churches. The 
oath generally used in court had a religious content, though non- 
believers had the right to one that made no reference to a deity 



103 



Finland: A Country Study 

and instead was only a solemn affirmation of the truth of their tes- 
timony. Although it was rarely invoked, there was a Finnish law 
against blasphemy. Numerous religious programs and services were 
broadcast on the country's state radio and television networks. 

Much of this religious influence was based in Finland's past, 
however, and did not correspond with attitudes of most Finns, 
because by the 1980s the country had become a highly secularized 
society. Polls revealed, for example, that about 70 percent of the 
population believed in God, a good deal fewer than the 90 percent 
who belonged to the state churches. About 40 percent of the popu- 
lation believed that the best place to find God was in the Bible, 
but only about 10 percent read it at least once a week, striking 
figures for a Protestant country. Frequent church attendance was 
unusual. Surveys conducted during the 1980s found that perhaps 
as few as 4 percent went to church every Sunday, about 12 per- 
cent went once a month, and 43 percent went at least once during 
the course of a year. 

These figures did not give a complete picture of Finnish reli- 
gious life, however. Finland's pietist traditions meant that there 
was much private prayer as opposed to public worship; about one- 
third of Finns under the age of thirty-five and more than half of 
those above this age reportedly prayed every week. In addition, 
the Lutheran Church touched the lives of many Finns through its 
considerable social work and counseling, although these activities 
were often not strictly religious in nature. 

The role the state churches played in life's key moments made 
them, for reasons of tradition, important to most Finns, even to 
those who were not religious. More Finns were baptized, married, 
and buried with church rites than were members of the churches. 
A very important rite of passage for adolescents was confirmation, 
which signified a coming of age even for those from freethinking 
families. For this reason, more than 90 percent of 15-year-olds were 
confirmed, despite the several weeks of lessons this entailed. 
Although church membership was a routine affair for many, polls 
conducted in the 1970s and the 1980s consistently found that only 
about 10 percent of those interviewed had given any serious thought 
to leaving a state church, even though freedom from the church 
tax would mean a small financial gain. For many Finns, leaving 
their church would be too great a break with family and commu- 
nity traditions. In addition, some of the values that churches had 
traditionally stood for had been internalized. Observers noted, for 
example, that although Finland had undoubtedly become more 
secularized since World War II, particularly in the urban areas, 
the traditional Lutheran virtues of hard work and self-discipline, 



104 



Helsinki Cathedral 
Courtesy Embassy of Finland, Washington 

inculcated over the centuries, were still evident in the lives of most 
Finns. 

Lutheran Church of Finland 

Religious life in Finland since the Protesrant Reformation has 
been dominated by the Lutheran Church of Finland. For most of 
this period, almost all Finns belonged to it. In the late 1980s, about 
90 percent of the population were members, and an even greater 
number participated in its rituals. During the time of Swedish rule, 
the church was the country's state church, and it was part of the 
national government, subordinate to the Swedish king. Even when 
headed during the nineteenth century by Russian tsars of the 
Orthodox faith, the Lutheran Church remained a state church. 
Since 1809, however, it has had to share this distinction with the 
Orthodox Church, which had followers in the eastern province of 
Karelia. 

The Ecclesiastical Law of 1869 gave the Lutheran Church a meas- 
ure of independence from the state by allowing it a representative 
body, the Synod, that could decide many important church mat- 
ters on its own. When Finland became independent, the church 
gained a greater degree of autonomy, although it still was subject 
to state supervision. The president, for example, decided who was 
to become a bishop, using a list of three candidates submitted by 
the Lutheran Church. In 1943 the formation of its own central 



105 



Finland: A Country Study 

administration, separate from the Ministry of Education, meant 
the church was largely self-sufficient. Some practical matters, such 
as levels of church taxes, salaries and pensions, or reorganization 
of church districts, were still decided by the government or required 
its approval, but in many other matters the church set its own 
course. 

A study commission of 1977 recommended a greater separation 
of church and state as a gocd for Finnish society. The next decade's 
discussion of abolishing the presidential selection of bishops was 
one example of efforts to realize this goal. The gradual movement 
away from the national government meant that the Lutheran 
Church of Finland, although still a state church, was more indepen- 
dent than the other Lutheran churches of the Nordic region. This 
independence was so marked that students of religion commonly 
regarded it not so much as a state church, but as a folk church 
that served all Finns, members and nonmembers alike. 

Revivalist Movements Within the Lutheran Church 

Another characteristic of the Lutheran Church of Finland that 
distinguished it from the other Lutheran churches of the Nordic 
countries was the strong tradition of revivalism that flourished 
within it. Elsewhere, revivalists left the state churches and founded 
their own. Although Finnish revivalist movements at first seemed 
a threat to the state church, ecclesiasticcd authorities came to learn 
that these new currents of religious feeling could enrich the church 
rather than diminish it. Since the nineteenth century, about half 
a dozen distinct movements had found a secure and enduring place 
within the established church. This meant that the Lutheran Church 
in Finland did not experience recurring splits caused by members 
dissatisfied for reasons of doctrine or temperament. The enthusiasm 
and the fervor of the revivalists were a frequent tonic to the state 
church, and their presence within it allowed the church closer ties 
to the whole of the Finnish people than would otherwise have been 
possible. 

The revivalist movements remained distinctly Lutheran; they 
adhered to the doctrine of justification by faith alone as the center 
of preaching and teaching, and made clear demarcations between 
the Kingdom of God and the material world. Worldly pleasures 
were generally decried, with a varying degree of emphasis being 
placed instead on abstinence, faith, abnegation, and prayer. The 
faithful could go to God directly without the church and clergy as 
intermediaries. Priestly intervention was not necessary in the 
spiritual realm. In the material world, however, there was secular 



106 



The Society and Its Environment 



government with a justified civil authority worthy of obedience. 
The movements dXso followed the traditional Lutheran insistence 
on giving ritual a smaller place than it enjoyed in Roman Catholi- 
cism or Eastern Orthodoxy. Hence, there were only two 
sacraments — baptism and Holy Communion — retained as symbols 
to strengthen faith, for Lutherans felt that they had no inherent 
redemptive value. 

In the late 1980s, the five or six main movements had well over 
100,000 members, and each movement was vigorous enough to 
have a central organization, newspaper, or magazine. Each held 
a summer convention that could attract tens of thousands of the 
devout. Though the movements might on occasion disagree with 
positions adopted by the Lutheran Church as a whole, they could 
protest them, or could actually prevent their adoption at the church's 
democratically arranged meetings and forums. 

The earliest of the movements was The Awakened. Its most im- 
portant leader, Paavo Ruotsalainen (1777-1852), was an unedu- 
cated peasant who attracted a substanti2d following by appealing 
to the poor and the oppressed through his emphases on Divine great- 
ness and on human wretchedness and helplessness. Man, he 
proclaimed, was inept and could never succeed; only God redeemed 
and healed. Man's duties, then, were to abandon his own works 
and to trust only in God. Followers of The Awakened held reli- 
gious services at their homes to supplement those of the church. 
Unlike the Laestadians, who belonged to a movement founded 
somewhat later, followers of The Awakened were tolerant; they 
did not call attention to themselves as believers to whom grace be- 
longs, in contrast to the rest of the world, which was unrepentant. 
In the late 1980s, the movement was strongest in the eastern Savo 
region and in Ostrobothnia, and it attracted between 30,000 and 
40,000 to its summer meetings. 

The Laestadian Movement, named after its founder, Lars Levi 
Laestadius (1800-61), a Swedish preacher in Lapland, was perhaps 
the strongest of all the revivalist movements; even in the 1980s, 
it could attract 100,000 of the faithful to its mass meetings. One 
reason for its large gatherings was the importance the movement 
attached to the visible congregation and to the absolution given 
to its members after confession. The movement's services were often 
marked by ecstatic outbursts. Laestadians were somewhat intoler- 
ant, as they stressed the certainty of salvation for Christians and 
the probability of damnation for nonbelievers. This adamancy 
caused occasional rifts within the movement. Laestadians continued 
to have their stronghold in northern Finland, where the movement 
had originated. 



107 



Finland: A Country Study 



The Evangelical Movement was an offshoot of The Awakened. 
Its founder, Fredrik Gabriel Hedberg (1811-93), believed that an 
obsession with wretchedness detracted from the assurance of sal- 
vation that a Christian has through his faith in Christ's righteous- 
ness. The movement stressed infant baptism, as its adherents 
believed the whole of salvation was given through this sacrament. 
It also was noted for its missionary work abroad. 

The smsdlest of the old revivalist groups was that of the Sup- 
phcationists, founded by Henrik Renqvist (1789-1866), an early 
advocate of the temperance movement. Supplicationists believed 
in frequent and fervent prayer and in meetings at which all 
remained on their knees. Supplicationists were active mostly in 
southwestern Finland. Quite conservative in their outlook, they 
were not especially successful in attracting young converts. 

Revivalism has also seen the formation of newer groups. One 
of these was the Fifth Revival, dating from shortly before World 
War II. It stressed missionary work and evangeUsm. In the 1970s 
Charismatics also began to be active within the Lutheran Church 
of Finland. 

Organization and Duties of the Lutheran Church 

The Lutheran Church was divided into eight dioceses, each 
headed by a bishop. An exception was the diocese of Turku, which 
was headed by an archbishop. Although he had no legal power over 
the other bishops, the archbishop was regarded as the first among 
equals and was the country's most prominent clergyman. He 
presided over important church meetings and was frequently the 
church's spokesman. One of the dioceses, that of Borga, did not 
have a primarily territorial basis, but ministered to the Swedish- 
speaking members of the church throughout the country. For 
administrative purposes, each diocese had a chapter, consisting of 
the bishop, three other clergymen, and a jurist. The chapter also 
functioned as a court to resolve disputes and to answer appeals 
against church decisions. Appeals against chapter decisions were 
handled by higher state courts. The highest subdivision of the dio- 
cese was the deanery, an administrative entity no longer of much 
importance. The seventy-odd deaneries were divided into parishes. 
In the late 1980s, there were just under 600 of these core units of 
the church. The 600 parishes varied widely in both the number 
of their parishioners and their geographic extent. In the sparsely 
populated north, for example, a parish could have more square 
kilometers within its jurisdiction than it did parishioners, while there 
were nearly three dozen parishes in Helsinki alone. 



108 



The Society and Its Environment 



The Lutheran Church of Finland employed about 18,000 per- 
sons in 1987, some 10,000 of whom worked full-time. There were 
about 1,400 ministers, enough to meet the church's needs. They 
received their training at two institutions, one in Helsinki and the 
other in Turku. The first women priests were ordained in 1988. 
Until that time, women had been limited to the secondary role of 
lector, with duties that encompassed teaching, pastoral work, and 
administering Holy Communion. 

The highest body of the church was the Synod, which met twice 
a year, once in the spring and once in the fall. The 108-member 
body consisted of the 8 bishops, 1 military bishop, 2 high judges, 
1 representative of the government, and 96 elected delegates — 64 
of whom were laymen and 32 of whom were clergymen. The num- 
ber of delegates that the individual diocese sent to the Synod 
depended on its population, but each diocese sent at least six 
delegates, two of whom were clergymen. Chaired by the archbishop, 
the Synod had a number of responsibilities, including deliberat- 
ing on legislative questions, directing disbursement of the resources 
of the central church fund, supervising Bible translations, discuss- 
ing the nature of relations with other religious organizations, and 
resolving tiindamental and highly divisive issues. 

Two other central bodies were the Ecclesiastical Board and the 
Bishops' Conference. The former was a permanent body, chaired 
by the archbishop, that oversaw the church's administration and 
finances and prepared matters for discussion at the Synod. The 
latter, consisting of the bishops and eight other church officials, 
met twice a year to discuss, in an unbinding way, issues of con- 
cern to the dioceses. 

The church placed great emphasis on congregational life. Despite 
the apparent episcopad nature of the church organization, parishes 
were quite independent. They made most of their decisions on their 
own and had only to observe the constraints of ecclesiastical law. 
By means of democratically elected councils and boards, they chose 
their own pastors, church musicians, and administrative person- 
nel and, to some degree, set their own salaries. Every adult mem- 
ber of a parish had the right to vote, and he or she had the possibility 
of winning a place on the council or board, which meant that the 
laity had much say about how its parish was run. 

Parishes were financially independent, for it was to them that 
the national government paid the church tax, equal to about 1 per- 
cent of the taxable income of parishioners. Corporations within 
a parish were also obliged to pay the church tax, and, altogether, 
this tax represented about 75 percent of the Lutheran Church's 
income. Some of the religious and social services that a parish 



109 



Finland: A Country Study 

managed yielded income, too, as did the 1 percent of the nation's 
forests that were in church possession. An elected administrative 
board and an executive council managed parish finances, although 
in urban areas parishes sometimes banded together to handle such 
practical details. Parishes were obliged, however, to pay about 6 
percent of their income to a fund, used by the church as a whole, 
to help poorer parishes and to pay for other activities like mission- 
ary work. 

The historiczd role of the Lutheran Church as a state church was 
reflected in the services managed by the parish that in other coun- 
tries were the concern of secular government. For instance, it main- 
tained the official population records for all of its members. Those 
of nonmembers were kept by local government. Parishes managed 
graveyards. In an area where there was no alternative cemetery, 
nonmembers or nonbelievers could be buried in one belonging to 
the church. Weddings performed by the parish had the same value 
as civil services, provided both the bride and groom were Christians. 

Parishes did not limit themselves to regular religious services and 
to other activities such as Sunday schools or study groups. They 
often organized a specifically Finnish religious meeting, the seurat, 
which had its origins in the revivalist tradition and was a mixture 
of hymns and addresses by both clergy and laymen. 

Parish personnel also offered services of a secular nature that 
supplemented social services provided by the state. Church law 
required that each parish have a deacon or deaconess who had many 
of the responsibilities of a state social worker. Often trained as 
nurses, deaconesses ministered to the sick, aged, and handicapped 
and coordinated their work with state agencies. Since World War 
II , the church has been active in providing personnel and facilities 
to youth programs, such as summer camps. 

Orthodox Church of Finland 

The other state church was the Orthodox Church of Finland. 
Although it had a much smaller membership than the Lutheran 
Church of Finland, only 56,000 in 1987, it enjoyed the same legal 
status and rights as the larger church. The state paid it the church 
tax it had collected from its parishioners, and the Orthodox Church 
kept parishioners' official demographic records. Although the state 
had some control over its activity, the Orthodox Church was largely 
independent. It also was a distinctly Finnish church, for although 
it rites and practices were Slavic, in accordance with Orthodox doc- 
trine, it had been using the Finnish language in its services since 
the second half of the nineteenth century. After Finland became 
independent, the Orthodox Church of Finland broke with the 



110 



View of Helsinki's historic center: foreground, Uspenski 
Cathedral, the largest Orthodox church in Western Europe; upper left, 
the Esplanade, the capital's spacious promenade 
Courtesy Embassy of Finland, 
Washington 

Russian Orthodox Church, and after 1923 it belonged to the Ecu- 
menical Patriarchate of Constantinople, the leader of which was 
its nominal head. 

Before World War II, most members of the Orthodox Church 
lived in the province of Karelia. After much of the province was 
annexed by the Soviet Union in 1944, most Finns living in the 
annexed areas fled westward. Some 70 percent of the members of 
the Orthodox Church were therefore dispersed throughout Finland, 
and many settled in regions where before there had been only Lu- 
therans. By the 1980s, there were twenty-five parishes in the coun- 
try. In 1980 a third diocese was created in northern Finland to 
minister better to Orthodox Christians living in that region and 
to make the Orthodox Church eligible to become fully autonomous, 
or in Orthodox terminology, autocephalous. 

The highest official of the Finnish church was the archbishop 
of the diocese of Karelia, with its seat at Kuopio. Two other bishops, 
or metropolitans, headed the other two dioceses, those of Helsinki 
and Oulu. The church's highest governing body was the Church 
Assembly, which met every third year unless more frequent meet- 
ings were necessary. It consisted of thirty-four voting members. 



111 



Finland: A Country Study 

seventeen of whom were laymen. Routine administration was 
managed by the Church Council. The Bishops' Synod approved 
the doctrinal decisions of the assembly. 

Local administrative practices were democratized and mirrored the 
power and influence of the laity seen in the Lutheran Church. 

Smaller Registered Churches 

In the 1980s, there were more than two dozen other registered 
religions in Finland, but none of them enjoyed the legal status of 
the two state churches. The largest single group in the second half 
of the 1980s consisted of several Pentecostal churches that drew 
on the revivalist strains always present in the Finnish religious tra- 
dition. Pentecostal churches had a total congregation of about 
40,000, distributed in a number of organizations. The Church of 
Jesus Christ of Latter Day Saints (Mormons) had some success 
and had about 4,000 followers. Roman Catholics numbered about 
4,000, distributed in 5 parishes presided over by a bishop. Most 
of the score of priests were foreigners, and Roman Catholic Finns 
who desired ordination had to study abroad. So successful had the 
Protestant Reformation been in extirpating Roman Catholicism 
from Finland that for more than three centuries no Finn had become 
a Roman Catholic priest until one was ordained in Paris in 1903. 
The Jewish community of 1,200 persons was located in southern 
urban areas. It was so small that it was having trouble sustaining 
itself and had to seek its rabbi abroad. Finland's tiny Muslim com- 
munity dated from the nineteenth century and numbered about 
900. As in other Western countries, eastern religions and sects had 
received some attention in Finland in recent decades. The most 
successful of them was the Baha'i Society of Finland with just over 
300 followers. 

Education 

Finland has had a strong tradition of literacy since the Protes- 
tant Reformation. The Lutheran Church aimed at widespread liter- 
acy to enable the common man to read the Bible. In the next 
century, proof of literacy became a requirement for the right to 
marry. By the second half of the nineteenth century, legislation 
was in place for a general system of elementary education, although 
the tsarist regime did not gdlow its realization. After independence, 
a Comprehensive Education Act was passed in 1921 that met the 
state's constitutional requirement to provide "universsd compul- 
sory education," including elementary education, at no cost. Legis- 
lation also stipulated that Finnish citizens had a duty to be educated. 

In the postwar period, the basic goal of Finnish education 



112 



The Society and Its Environment 



authorities has been to create a system that would provide equal 
educational opportunities for everyone, would guarantee the country 
a populace able to meet the technological challenges of the inter- 
national marketplace, would encourage democratic values, and 
would allow each person the fullest readization of his or her poten- 
tial. Work to realize this goal has led since the 1960s to profound 
changes in the organization of the country's school system. The 
old elementary school system that determined at an early age 
whether pupils were to follow a general or an academic course of 
studies was replaced by a uniform comprehensive system that post- 
poned this decision until the mid- teens and that, even then, did 
not bar anyone from higher training at a later time. Secondary 
education was broadened and reformed to allow a greater range 
of choices and opportunities. University education was expanded 
and distributed more equally across the country, its control was 
democratized, and access to it was widened. 

Primary and Secondary Education 

The School System Act, passed in 1968, abolished the two- track 
elementary school system and replaced it with a single comprehen- 
sive school with a nine-year course of studies. The new school was 
uniform throughout the country and was compulsory for all chil- 
dren between the ages of seven and sixteen. Children in Finland 
began school at a later age than those in many other countries 
because of the distances some of them had to travel in sparsely set- 
tled areas. Private schools also were gradually incorporated into 
the system, which was fully in place by the late 1970s. 

The school program was broken into two stages: a lower level 
for the first six grades and an upper level for grades seven through 
nine (see fig. 13). In some areas there was a voluntary tenth year. 
The school year began in the second half of August and ended in 
early June, with a two-week break at Christmas and a one-week 
break both in the winter and at Easter. The pre- school system was 
directed by the Ministry of Social Affairs and Health. In the 
mid-1980s, this system was able to accommodate only one-third 
of the children of the relevant age-group. 

Instruction at comprehensive schools was free, as were books, 
a daily hot meal, transportation, and even lodging for those stu- 
dents who lived too far from a school to manage a daily commute. 
Efforts were made to ensure that the quality of instruction did not 
vary and that children in Lapland were as well instructed as those 
in Helsinki. In bilingual communities, children had the right to 
instruction in their own language. Children also had the right to 
classes in their own religion, unless there were too few students 



113 



Finland: A Country Study 



AGE 
19 

16 
13 



SCHOOL 
YEAR 

12 



UNIVERSITY 



1 

I ACADEMIC 
|HIGH SCHOOL 



VOCATIONAL 
^DUCAJiqiM 

General Studies 



Upper Level 

COMPREHENSIVE SCHOOL 
Lower Level 



C 
O 
M 
P 
U 
L 
8 
O 
R 
Y 



DAY CARE CENTERS 



Figure 13. Education System, 1980s 



of a particular religion to make this practicable, or they could be 
excused from religious instruction. If at least five students had no 
religion, an alternative nonreligious course was obligatory. Schools 
were not divided according to sex. 

After graduation from a comprehensive school, students con- 
tinued their education at either vocational schools or the more 
demanding vocational institutes, or at the academically oriented 
secondary schools. During the 1980s, a slight majority of students 
chose vocational training to prepare them for one or more of several 
hundred commercial and technical occupations. Some 60 percent 
of these students attended two-year to three-year courses at voca- 
tional schools, while the remainder enrolled in four-year to five- 
year courses at vocational institutes that led to careers in highly 
skilled fields or to management and planning positions. Students 
at the academic high schools had to pass an examination, after 



114 



The Society and Its Environment 



three years of study, before they could attend a university. Fewer 
than half passed this examination, and only about one-fourth of 
those successful managed to secure places at universities. Although 
the academic high school was the most common route to a univer- 
sity in the 1980s, an increasing number of places there were being 
held for graduates of vocational institutes. 

The schools' curricula were set by law, and their content was 
determined at the national level by the Ministry of Education, the 
National Board of General Education, and the National Board of 
Vocational Education. Local authorities, however, had some say 
about how they would be taught. Language instruction accounted 
for one-third of teaching time in comprehensive schools and for 
somewhat more in secondary schools. In the third grade, children 
began taking a second language, usually Finnish for Swedish speak- 
ers and English for the others. Sciences and mathematics accounted 
for about 30 percent of teaching time at the comprehensive level 
and for somewhat less at academic schools at the secondary level, 
while social and humanistic courses accounted for 12 percent in 
the former and 18 percent in the latter. Comprehensive schools 
spent one-fourth of their time on art, physical education, and related 
courses, while secondary schools accorded them a little less than 
one-fifth of their time. The courses vocational schools offered varied 
greatly because of the wide variety of material taught. After the 
first year of general courses, most instruction was connected directly 
with the chosen specialty. 

Since the late 1970s, all teachers in the comprehensive and secon- 
dary schools have been obliged to have a university degree. Two 
art academies and eight universities provided teacher education. 
Vocational teachers, given the wide variety of courses they taught, 
could sometimes substitute occupational experience for university 
training. Teachers of the first six years of comprehensive school 
functioned as class teachers rather than as subject specialists and 
were required to have a Master of Education degree, while their 
colleagues in the upper levels needed a master's degree in the sub- 
ject they had chosen to teach. Although selection criteria for places 
in teacher training were stringent (only 10 percent of applicants 
were accepted), Finland had enough teachers to allow classes in 
the comprehensive system to average about thirty pupils; classes 
in the secondary schools averaged about twenty pupils. In sparse- 
ly populated areas, however, it was sometimes necessary to form 
classes with pupils of different ages and grade levels. 

Special education generally was accomplished within regular 
schools. This practice was in consonance with the overall policy 
of avoiding "tracking," which was seen to limit a pupil's range 



115 



Finland: A Country Study 

of educational opportunities by placing him or her at a particular 
level of instruction. An attempt was made to keep all members of 
a class together and to address special needs through individual 
counseling and tutoring. This principle reflected the overriding goal 
of having an open and flexible school system that matched individual 
qualities and aspirations. 

Higher Education 

In the late 1980s, Finland's system of higher education consist- 
ed of ten universities (each with at least several different faculties), 
seven one-discipline institutions with such specialties as technolo- 
gy or business administration, and three art academies. The lar- 
gest, the University of Helsinki, was founded in 1640. The 
remainder date from the twentieth century; the newest, the Univer- 
sity of Lapland at Rovaniemi, from 1979. During the mid-1980s, 
there were about 90,000 students at institutions of higher educa- 
tion. Competition for acceptance for university-level study was 
intense, and fewer than one out of four applicants obtained a place. 
There were no private universities in Finland. 

By the late 1980s, institutions of higher learning were granting 
three degrees: a master's degree that required from four to six years 
of study; a graduate degree, the licentiate, requiring another two 
years of study; and the doctorate, awarded usually after four years 
or so of graduate study. A candidate did not have to obtain the 
licentiate to be awarded the doctorate. 

Like the country's primary and secondary schools, Finnish 
universities were free. To help with living expenses, however, stu- 
dents who were enrolled in secondary schools and at universities 
were entitled to financial aid by the Study Allowances Act of 1972. 
By the 1980s, more than half the student body at these institutions 
received aid in the form of allowances or low-interest loans. 

Institutions of higher learning had about 7,000 instructors 
altogether in the 1980s. Academic freedom was ensured through 
a tenure system that protected most of this number from dismis- 
sal. The institutions themselves were under the overall direction 
of the Ministry of Education, but they enjoyed considerable inter- 
nal autonomy. The autonomy of the University of Helsinki was 
even guaranteed by the Constitution of 1919. The trend toward 
greater internal democracy had also touched Finnish universities, 
and by the late 1980s professors were sharing much of their former 
power with other faculty members, university staff, and students. 

An area of future growth in Finnish education was expect- 
ed to be that of supplementary education at the university 
level. No degrees were to be granted, but much greater access to 



116 



Finland: A Country Study 



university resources was to be offered to those wishing to deepen 
their knowledge of a particular field either for professional reasons 
or for personal pleasure. It was estimated that, by the early 1990s, 
one-tenth of university teaching would occur in an open-university- 
like forum. 

Adult Education 

Finland had a long tradition of adult education, and by the 1980s 
nearly one million Finns were receiving some kind of instruction 
each year. Forty percent of them did so for professional reasons. 
Adult education appeared in a number of forms, such as secon- 
dary evening schools, civic and workers' institutes, study centers, 
vocational course centers, and folk high schools. Study centers 
allowed groups to follow study plans of their own making, with 
educational and financial assistance provided by the state. Folk high 
schools were a distinctly Nordic institution. Originating in Den- 
mark in the nineteenth century, folk high schools became common 
throughout the region. Adults of all ages could stay at them for 
several weeks and take courses in subjects that ranged from han- 
dicrafts to economics. 

Public Welfare 

In the late 1980s, Finland had one of the world's most advanced 
welfare systems, one that guaranteed decent living conditions for 
all Finns. Created almost entirely during the first three decades 
after World War II, the system was an outgrowth of the traditional 
Nordic belief that the state was not inherently hostile to the well- 
being of its citizens, but could intervene benevolently on their 
behalf. According to some social historians, the basis of this belief 
was a relatively benign history that had allowed the gradual emer- 
gence of a free and independent peasantry in the Nordic countries 
and had curtailed the dominance of the nobility and the subsequent 
formation of a powerful right wing. Finland's history has been 
harsher than the histories of the other Nordic countries, but not 
harsh enough to bar the country from following their path of social 
development. 

Growth of the Social Welfare System 

In the last years of the nineteenth century, Finnish social policy 
had as its goal a lessening of class friction. The few existing pieces 
of social legislation addressed the needs of specific groups rather 
than of society as a whole. After the Civil War, little was accom- 
plished in welfare legislation. A woefully insufficient national pen- 
sion plan was set up in 1937, as were measures to aid needy mothers. 



118 



The Society and Its Environment 



It was only after World War II that Finnish social policy acquired 
the characteristics that in the next decades made it similar to other 
Nordic systems of social welfare. 

According to Finnish sociologist Erik Allardt, the hallmark of 
the Nordic welfare system was its comprehensiveness. Unlike the 
welfare systems of the United States or most West European coun- 
tries, those of the Nordic countries covered the entire population, 
and they were not limited to those groups unable to care for them- 
selves. Examples of this universality of coverage were national 
flat-rate pensions available to all once they reached a certain age, 
regardless of what they had paid into the plan, and national health 
plans based on medical needs rather than on financial means. In 
addition, the citizens of the Nordic countries had a legal right to 
the benefits provided by their welfare systems, the provisions of 
which were designed to meet what was perceived as a collective 
responsibility to ensure everyone a decent standard of living. The 
Nordic system also was distinguished by the many aspects of peo- 
ple's lives it touched upon. 

The Finnish welfare system differed from those of other Nordic 
countries mainly in that its benefits were lower in some categories, 
such as sickness and unemployment payments; otherwise, the Fin- 
nish system fit into the Nordic conception of social welfare. Fin- 
nish social expenditures constituted about 7 percent of the country's 
gross domestic product (GDP — see Glossary) in 1950, roughly equal 
to what Sweden, Denmark, and Norway were spending. By the 
mid-1980s, Finland's social expenditures had risen to about 24 per- 
cent of GDP, compared with the other countries' respective 35, 
30, and 22 percent (see table 9, Appendix A). Less than 10 per- 
cent of these expenditures was paid for by Finnish wage earners; 
the remainder came roughly equally from the state and from 
employers. Until the second half of the 1970s, Finnish employers 
had paid a higher share of social outlays than had their counter- 
parts in the other Nordic countries. In response to the slowdown 
of the world economy after 1973, there was some shifting of social 
burdens to the state, which made Finnish companies more price 
competitive abroad. 

Finland's welfare system also differed from those of its neigh- 
bors in that it was put in place slightly later than theirs, and it was 
only fully realized in the decade after the formation of the Red- 
Earth government in 1966 (see Finland in the Era of Consensus, 
1966-81 , ch. 1). Just after World War II, the Finns directed their 
attention to maternal and child care. In 1957 the government 
established an improved national pension plan and supplemented 
it in the early 1960s with private pension funds. Unemployment 



119 



Finland: A Country Study 



aid was organized in 1959 and in 1960, and it was reformed in 
1972. Legislation of the 1950s and the 1960s also mandated the 
construction of a network of hospitals, the education of more medical 
personnel, and, from 1963 to the early 1970s, the establishment 
of a system of health insurance. The housing allowance system 
expanded during the 1960s to reach ever-widening circles of the 
population. Health-care officials turned away from hospital care 
in the 1970s, and they began to emphasize the use of smaller local 
clinics. By the 1980s, the Finnish welfare system was up to Nordic 
standards and had the support of most Finns. All major political 
parties were committed to maintaining it, and its role in Finnish 
society seemed secure for the coming decades. 

Organization of the Welfare System 

In the late 1980s, the Ministry of Social Affairs and Health 
directed the welfare system through five departments: social 
insurance, social welfare, health care, temperance and alcohol 
policy, and labor. According to Finland's administrative tradition, 
it is the task of a ministry and its departments to determine policy, 
which is then administered by central boards. In the case of social 
policy, there were three central boards for social welfare, health, 
and labor protection. An exception to this administrative division 
was the Social Security Institute, which supervised the national pen- 
sion plan and health insurance for the Eduskunta and the Council 
of State. 

The actual supplier of social care was local government — the 
municipality — supervised by authorities at the provincial level who 
had to approve the administrative plans of municipalities before 
these local governments could receive funds from the state. In the 
early 1980s, funds from the state made up about 30 percent of the 
monies spent on all social services and pensions, while employers 
supplied about 40 percent; local governments, 15 percent; and the 
recipients of services, the remainder. 

Income Security Programs Classified as Social Insurance 

Finland, like the other Nordic countries, divided most of its social 
programs into those that guaranteed income security and those that 
provided social and health services. Income security programs came 
in two categories: social insurance, which provided income despite 
old age, illness, pregnancy, unemployment, or work-related inju- 
ries; and income security classified as welfare, which consisted of 
income transfers to aid families through measures such as child 
payments, maternity grants, payments to war victims and their 
survivors, and financial aid to those afflicted by disability or pressing 



120 



The Society and Its Environment 



needs. Programs of the first category, income security guarantees, 
took some 80 percent of the funds expended for social welfare (see 
table 10, Appendix A). 

National Pension Plan 

Finland's first national old-age pension plan dates from 1937, 
but it was so poorly funded that a new National Pensions Act was 
put into effect in 1957. In the late 1980s, this law, somewhat 
reformed, was still the basis of Finland's National Pension Plan, 
which was open to all residents over the age of sixteen, even to 
those who had never paid into it. Even those foreigners not from 
the Nordic countries were entitied to this pension if they had resided 
in Finland for at least five years. Those who left for residence in 
a country outside Nordic Europe, even those who were Finnish 
citizens, could receive the pension for only one year. The flat-rate 
national pension could be paid as an old-age pension, once a per- 
son reached the age of sixty-five; as an invalidity pension (either 
full or partial) to those between the ages of sixteen and sixty-four 
who were no longer able to work; or, in some cases, to the long- 
term unemployed who were in their late fifties or early sixties. In 
addition to these classes of beneficiaries, survivors of those eligible 
for national pensions who were not themselves eligible for the pen- 
sions could receive pensions under the terms of the Survivor's Pen- 
sion Plan. Also tied to the National Pension Plan were payments 
for handicapped children living at home and for some combat vet- 
erans of World War II. 

Payments of the national pension were uniform for everyone; 
in the mid- 1980s, they amounted to Fmk334 (for value of the Fin- 
nish mark — see Glossary) a month. To this amount were added 
the assistance payment, which varied according to a pensioner's 
marital status, the cost of living in his or her locality, and other 
pensions that he or she received. Other supplementary payments 
could be made for dependent children, for degree of disability, and 
for housing costs, as well as for veterans of the Civil War and of 
World War II. In the mid-1980s, the supplemental payment to a 
single pensioner could range from Fmkl ,362 to Fmkl ,436 a month. 
The supplement for each child amounted to Fmkl81, and hous- 
ing supplements V2iried according to housing costs but could amount 
to as much as approximately Fmkl, 000. Helplessness supplements 
could be worth up to about Fmk400, depending on the age and 
the physical state of the pensioner. National pensions were indexed, 
and they increased in value each year. Since reforms of the early 
1980s, national pensions were not taxable if they were the sole source 
of income. Pensions were no longer affected by a spouse's earnings 



121 



Finland: A Country Study 

or pension income, and the national pension could only be reduced 
by income from other pensions. The National Pension Plan was 
funded by the beneficiary's own contributions, about 2 percent of 
his or her locally taxable income, and by employer contributions 
of 4 to 5 percent of the insured person's wages. 

Employee Pension Plans 

The Employees' Pensions Act was passed in 1961 to supplement 
the National Pension Plan, which, while adequate for Finns living 
in the countryside — a majority of the population until the 1960s — 
did not provide enough benefits for city dwellers. During the next 
decade, other compulsory wage-related pension plans were enacted 
into law for temporary employees, for national and local govern- 
ment employees, for those working for a state church, and for the 
self-employed. At the end of the decade, a supplementary plan was 
created for farmers as well. Seamen had had an income-based plan 
since 1956, and, as of 1986, those active in free-lance professions 
such as acting and writing cdso obtained coverage. These employ- 
ment pension plans were completely funded by the employers, pri- 
vate or public, who paid contributions, equal on the average to 
about 10 percent of a worker's earnings, into funds managed by 
seven large insurance companies or who set up funds on their own. 
Self-employed persons had to choose a fund. The Central Pension 
Security Institute was responsible for keeping records about 
employment and benefits. 

The normal age of pensionable retirement was sixty-five, and 
the pension paid was based on the average esirnings one had received 
in the last four years of work ending two years before retirement. 
One could receive up to 60 percent of private-sector earnings and 
up to 66 percent of public-sector earnings. The average wage-related 
pension in the mid-1980s was about Fmkl,000 per month. Older 
employees, at work before these pension plans became effective, 
were guaranteed a minimum pension of at least 29 percent if they 
retired before 1975, and 37 percent if they retired after this date. 
Like the national pension, wage-related pensions were indexed, 
and they increased each year. In addition, there were provisions 
relating to disability, early or late retirement, and survivors' benefits 
similar to those in effect for the National Pension Plan. 

Sickness Insurance 

The Sickness Insurance Act of 1963 introduced health insurance 
to Finland in two stages. First, beginning in 1964 it provided pay- 
ments when wages were lost because of illness or maternity leave 
and payments for the cost of treatment and medicine. Three years 



122 



The Society and Its Environment 



later, it began paying doctors' bills as well. Until the act went into 
effect, only a small minority of the population, generally those 
employed by large firms, had medical insurance. 

All persons resident in Finland for more than a short time were 
eligible for benefits. Foreigners had to register with the local health 
authorities to receive payments. In the 1980s, the daily payment 
made to make up for losses of income due to illness averaged about 
80 percent of a typical wage and could last for as many as 300 work- 
days. Highly paid individuals received less. Hospital care in pub- 
lic hospitals was generally free, and other compensation amounted 
to 60 percent of doctors' fees, 75 percent of laboratory expenses, 
and 50 percent of medicine costs. In the mid-1980s, dental care 
was free for anyone bom after 1961 , but for others it was paid only 
if dental problems had to be treated to cure a disease. Maternity 
leave payments amounted to about 80 percent of income for about 
one year, and could begin five weeks before the estimated date of 
the birth. Fathers could take some of this time, with a correspond- 
ing cut in the days allowed to the mother. Sickness insurance was 
funded by the recipients themselves through their payment of about 
2 percent of their locally taxable income, by employers who paid 
a contribution of about 1 percent of the employee's wages, and 
by the state. 

However generous these benefits appeared in an international 
context, medical fees had increased in the 1970s and the 1980s, 
and government compensation rates had not kept pace. Rates 
increased by 25 percent in 1986, but not enough according to some 
critics. Those who pressed for government relief believed it neces- 
sary even though public medical care, which constituted the bulk 
of medical care in Finland, was already highly subsidized and hence 
rather cheap compared with many other countries. 

Unemployment Insurance 

The Unemployment Security Act of 1984 reformed the unem- 
ployment assistance system that had been gradually worked out 
to dead with the persistent problem of unemployment in Finland 
(see Employment, ch. 3). The act arranged for coverage of all 
unemployed between the ages of seventeen and sixty-four, resident 
in Finland, whose income came from wages earned doing work 
for another person or legal entity. A person had to be in need to 
receive payments under the terms of the act and could be disquali- 
fied because of a spouse's earnings. The self-employed, full-time 
students, and people receiving pensions or maternity allowances 
were not eligible, nor were those who were unemployed because 
of illness, injury, or handicap, or who had quit work voluntarily. 



123 



Finland: A Country Study 



who had lost work because of labor disputes, or who had refused 
to accept employment. 

In the mid-1980s, those eligible for unemployment benefits 
received them in two ways. A basic daily allowance of Fmk70 went 
to any person looking for employment. This 2dlowance was means- 
tested, and the income of a spouse could disqualify a potential 
beneficiary. The allowance lasted as long as the recipient was 
unemployed. Those unemployed who were members of an unem- 
ployment fund (80 percent of Finns were) and who had worked 
for at least twenty- six weeks in the preceding two years were eligi- 
ble for more substantial benefits amounting to the daily basic 
allowance plus 45 percent of the difference between their daily 
wage and the basic allowance. After 100 days the payment was 
reduced by 20 percent. Beneficiaries of the income-related allow- 
ance could receive it for 500 days in a 4-year period. Workers in 
their late fifties and older who had been unable to find work could 
be granted an unemployment pension equal to a disability pen- 
sion until they reached the age when they would be eligible for an 
old-age pension. Unemployment benefits were administered by the 
Social Security Institute. The basic allowance was completely 
financed by the state. Employers and the state funded equal shares 
of 95 percent of the income-related payments and the beneficiary 
was responsible for the remaining 5 percent. 

Workmen's Compensation 

An employee who suffered work-related injuries was financi2dly 
protected through payments that covered mediccd and rehabilita- 
tion expenses and fuUy matched his or her wages. If injuries resulted 
in permanent disability, the worker could receive payments amount- 
ing to 85 percent of his or her wages for total disability. Survivors 
were eligible for pensions, as well as a sizable funeral grant. This 
compulsory program was entirely funded by the employer. 

Income Security Classified as Welfare 

In addition to the above benefits that were classified as income 
security in the form of social insurance, there were income security 
programs classified as welfare. One of the differences between the 
two classes of social programs was that the welfare measures were 
financed mostly through taxes, whereas social insurance programs 
were paid for by employers and employees. This second category 
of income security also consisted of payments to those eligible. The 
most important and expensive class of these benefits involved pay- 
ments to families with children. Other programs assisted those who 
had suffered war injuries and their dependents, provided financial 



124 



The Society and Its Environment 



aid to those called up for military service and to their families, made 
payments to the handicapped that helped them earn their living, 
and provided living allowances that were the last resort of those 
unable to earn their way. 

Family Aid 

Financial aid to families with children came in the form of child 
allowances, child care and maintenance allowances, and materni- 
ty benefits. Child allowances dated from the 1930s, and they were 
one of the oldest parts of the welfare system. The law in force in 
the late 1980s was the Child Allowance Act of 1948, which arranged 
for payments to parents for all children under the age of sixteen 
and resident in Finland, regardless of the wealth or nationality of 
the parents. By the mid-1980s, payments for the first child were 
a little more than Fmk2,000 a year, with payments increasing to 
Fmk4,800 for the fifth and additional children. Another payment 
of about Fmk 1,200 was made for children under the age of three. 
Child-care allowances had been paid since the 1970s to those par- 
ents who stayed at home to care for small children or who had en- 
gaged someone else to do so. A child maintenance allowance of 
as much as approximately Fmk400 a month was paid when a court- 
ordered maintenance payment for a child of divorced parents was 
not being paid. A maternity benefit, based on legislation of the 
1930s, was paid for each pregnancy. It came either as a grant of 
about FmkSOO or as a much more valuable set of materials needed 
to tend a child. It was withheld if the mother did not visit a clinic 
by the fifth month of pregnancy. 

Welfare Services 

In addition to the above measures that involved financial pay- 
ments to achieve social ends, the system of social care provided 
welfare services. By the mid-1980s, some 90,000 state and local 
employees were using about 5 percent of Finland's gross national 
product (GNP — see Glossary) to deliver a wide variety of social 
services under the overall direction of the Ministry of Social Affairs 
and Health. The expansion of the welfare system in the 1960s and 
the 1970s had caused the number of social workers roughly to tri- 
ple between 1970 and 1985. Since 1981 workers entering the field 
had been required to have university training. 

National government subsidies of from 30 to 60 percent of costs 
had the goal of making social services uniform throughout the coun- 
try, so that residents of even the most isolated community had the 
same range of services as were offered in Helsinki, though this aim 
was not always met. Social services were usually free, and they 



125 



Finland: A Country Study 



were available to anyone who wanted them, irrespective of the 
recipient's income. Information furnished to social workers was 
confidential and could not be released, even to another govern- 
ment agency. The ultimate aim of welfare services was to increase 
the quality of life and the independence of the client so that wel- 
fare services were no longer needed. 

The Social Welfare Act of 1982 replaced some older laws; it 
charged local government with providing such social services as 
general and family counseling and with making housing available 
to those needing it, most notably the aged and the infirm, trou- 
bled youth, and alcoholics. The law detailed local responsibilities 
for assigning specialists to assist persons living at home but no longer 
fully able to take care of themselves and for maintaining institu- 
tions for persons, be they aged, mentally handicapped, or addict- 
ed, whose afflictions were so serious that they could no longer live 
at home. 

Child-Care Services 

A law with far-reaching effects was the 1973 Child Day Care 
Act, which stipulated that all local governments were to provide 
good child day care for all families that desired it. The care for 
children up to seven years of age could be given either in day-care 
centers, sometimes private but generally run by local governments, 
or by accredited baby-sitters, either at the child's home or outside 
it. Although the number of places for day care had more than dou- 
bled to 100,000 by the mid-1980s, it would have had to double 
again to meet total needs. A 1985 law set the goal of being able 
to allow, by 1990, all parents of children up to the age of three 
the choice between home-care payments or a place for their child 
in a day-care center. One parent could also take unpaid employ- 
ment leave until the child's third birthday. The Child Welfare Act 
of 1983 enjoined local governments to look after children, and it 
empowered them to take a variety of measures if a child was being 
seriously neglected or abused. In the mid-1980s, about 2 percent 
of Finnish children were affected by this law. Another 1983 law 
made the corporal punishment of children illegal, as it was in the 
other Nordic countries. 

Services for the Disabled 

The Welfare of the Disabled Act of 1946 set the responsibilities 
for treatment of the physically handicapped. The institutions that 
offered housing, occupational training, sheltered working environ- 
ments, and physical rehabilitation were overseen by the National 
Board of Social Welfare, while about a score of schools for 



126 



View of Turku (Abo), Finland's third largest city, with the Aura River 
in the foreground; in the background, Turku Cathedral 
Courtesy Embassy of Finland, Washington 



127 



Finland: A Country Study 



handicapped children unable to attend ordinary schools was 
supervised by the National Board of Schools. Special equipment, 
like prostheses, was supplied at no cost, as were such services as 
the adaptation of living areas. In the late 1980s, there were some 
30,000 mentally handicapped Finns, 10,000 of whom received wel- 
fare ranging from living accommodations in an institution to day- 
center care or jobs in sheltered workshops. There were not enough 
places to accommodate gJl the mentally disabled properly, so some 
were placed in private homes or in retirement homes. 

Services for Substance Abusers 

The Welfare for Intoxicant Abusers Act of 1985 dealt mainly 
with alcoholism, as it was the only serious problem of substance 
abuse in Finland in the late 1980s. Finnish society had traditionally 
not seen alcohol as a part of daily life, but rather as something con- 
sumed on special occasions and then to the point of intoxication. 
Medical evidence of this harmful habit was that the Finnish inci- 
dence of death by acute alcohol poisoning was seven times that of 
Sweden and twenty times that of Denmark. Because of its trou- 
bled relationship with alcohol, the country enforced prohibition from 
1919 to 1931. A later measure against alcohol consumption was 
a 1976 law that banned liquor advertisements in most publications. 
Another measure increased the cost of alcohol by taixing it heavily, 
so much so that by the mid-1980s liquor taxes were an important 
source of state revenues. 

In the 1980s, there were still many abstainers in Finland who 
had moral objections to alcohol use, in contrast to the small minority 
of drinkers who accounted for more than half of total national con- 
sumption. In the late 1960s, a relaxation of the rules for the pur- 
chase of alcohol had as its goal a lessening of drink's glamorous 
appeal because it was, in a sense, forbidden. This policy may have 
backfired when sales of beer in grocery stores and the availabil- 
ity of hard liquor at more restaurants caused alcohol consumption 
to more than double within a decade. Since the mid-1970s, however, 
analysts of Finnish alcohol use have seen consumption rates level 
off and drinking habits become more moderate. Although the num- 
ber of abstainers had dropped sharply in the postwar 
period, causing some sociologists to refer to Finns who became 
adults in the 1950s and the 1960s as ''the wet generation," alco- 
hol was gradually coming to take a more ordinary place in every- 
day life. 

The Ministry of Social Affairs and Health had a special depart- 
ment concerned with substance abuse, the Department of Tem- 
perance and Alcohol Policy, that formulated welfare plans and 



128 



The Society and Its Environment 



directed the State Alcohol Monopoly responsible for the manufac- 
ture, importation, and sale of alcohol. Local authorities provided 
a variety of facilities for alcoholics — including clinics, half-way 
houses, and emergency housing open twenty-four hours a day that 
offered withdrawal treatments. When necessary, alcoholics could 
be confined against their will, but this practice was less common 
in the late 1980s than it had been previously. State welfare was 
supplemented by private and voluntary associations, such as 
Alcoholics Anonymous. 

Health System 

By the second half of the 1980s, Finns enjoyed a standard of 
health fully comparable to that of other highly developed countries. 
If health standards did not match those of Finland's Nordic neigh- 
bors in all areas, it was because Sweden, Denmark, and Norway 
were the world's leaders in health care. Finland had made remark- 
able progress, however, and was rapidly catching up. In one major 
area, the prevention of infant mortality, Finland led the world in 
the mid-1980s: it had the world's lowest infant mortality rate. 

Development of the Health System 

Since becoming an independent state in 1917, Finland has 
managed to deal with the "traditional" health problems. The most 
important cause of death in the nineteenth century, pulmonary 
tuberculosis, was brought under control by means of a network 
of tuberculosis hospitals built between the world wars. Smallpox 
and pneumonia have also ceased to be serious problems. With the 
aid of the vaccination law passed in 1952, the fight against com- 
municable diseases was largely won. In 1980, for example, there 
were no deaths from common diseases of this type. By the 
mid-1980s, no cases of diphtheria had been registered in Finland 
for several decades, and, with the exception of a mini-epidemic 
of seven cases in 1983-84, poliomyelitis also had disappeared. An 
emphasis on hospital construction in the 1950s and 1960s brought 
the ratio of hospital beds per capita up to international norms, and 
new medical training centers more than doubled the number of 
physicians between 1970 and the mid-1980s (see table 11, Appen- 
dix A). The passage of the Sickness Insurance Act in 1963 and fre- 
quent expansion of its coverage meant that good medical care was 
available to everyone. Later legislative measures, such as the 
Primary Health Care Act of 1972, or the Mental Health Act of 
1978, aimed at moving health care from large centers, increasing 
the amount of preventive treatment at smaller local facilities, and 
favoring out-patient care when possible. Finnish health authorities 



129 



Finland: A Country Study 

believed, even in the late 1980s, that care of this kind could be more 
flexible, humane, and effective and could also check cost increases. 
Despite this policy innovation, however, social expenditures on 
health had increased ten-fold in real terms since the early 1950s. 

Organization of the Health System 

Health care was directed by the Ministry of Social Affairs and 
Health and was administered by the National Board of Health. 
In accordance with government practices, the ministry decided poli- 
cy, and the national board determined how it would be admini- 
stered. Actual delivery of care was the responsibility of local govern- 
ment, especially after the Primary Health Care Act of 1972, which 
stipulated that the basis of medical treatment should be the care 
offered in local health clinics. Previously, the emphasis had been 
on care from large regional hospitals. 

The 1972 law resulted in the creation of about 200 local health 
centers each of which served a minimum of 10,000 persons. As 
municipalities varied greatly in size, small ones had to unite with 
others to form health centers, while about half the centers were 
operated by a single municipality. Centers did not necessarily consist 
of a single building, but encompassed all the health facilities in the 
health center district. With the exception of some sparsely settled 
regions, people were usually within twenty-five kilometers of the 
center charged with their care. 

A basic aim of the 1972 law was to give all Finns equal access 
to health care, regardless of their income or where they lived. 
Because most services of health centers were free, subsidies from 
the national government were required to augment the financial 
resources of municipalities. The subsidies varied according to the 
wealth of the municipality and ranged roughly from 30 to 65 per- 
cent of costs. By the mid-1980s, about 40 percent of the money 
spent on health went for primary care, compared with 10 percent 
in 1972. 

Health care centers were responsible for routine care such as 
health counseling, examinations, and screening for communi- 
cable diseases; they also provided school health services, home care, 
dental work, and child and maternal care. Most health centers had 
at least three physicians and additional staff at a ratio of about eleven 
per physician. Because of the high level of their training, nurses 
performed many services done by physicians in other countries. 
Most centers had midwives, whose high competence, combined 
with an extensive program of prenatal care, made possible Fin- 
land's extremely low infant mortality rate in the mid-1980s, the 
world's best at 6.5 deaths per 1,000 births. 



130 



The Society and Its Environment 



Once it was established that a health problem could not be treated 
adequately at a center, patients were directed to hospitals, either 
to one of about thirty local hospitals with some degree of speciali- 
zation, or to one of about twenty hospitals, five of which were 
university teaching hospitals, that could offer highly specialized care. 
In addition, there were institutions with a single concern, such as 
the sixty psychiatric hospitals, and others that dealt with orthopedics, 
epilepsy, rheumatism, or plastic surgery. Given the great drop in 
the incidence of tuberculosis in Finland, the country's dozen 
sanatoria were gradually being taken over for other purposes. 
Hospitals were usually operated by federations of municipalities, 
as their maintenance was beyond the power of most single munic- 
ipalities. By the mid-1980s, the country's public hospitals had about 
50,000 beds, and its 40-odd private hospitals had roughly 3,000. 
There were another 20,000 beds for patients at health centers, 
homes for the elderly, and other welfare institutions. 

Health Problems 

By the late 1980s, Finland's health problems were similar to those 
affecting other advanced countries. The most common causes of 
death in Finland were, first, cardiovascular diseases, followed by 
neoplasms (malignant and benign), accidents, poisonings, trauma 
from external causes (including suicides), and, lastly, diseases of 
the respiratory system (see table 12, Appendix A). The mortality 
rate from cardiovascular diseases was among the world's highest 
for both sexes, but it was especially high for middle-aged msiles. 
A national diet rich in fats was seen by medical specialists as a cause 
of the prevalence of coronary illnesses. 

Despite its location on the periphery of Europe, Finland was also 
affected by the spread of acquired immune deficiency syndrome 
(AIDS), but not to a serious degree. As of late 1988, only 32 cases 
of AIDS had been reported, and 222 persons had been found to 
be infected with the human immunodeficiency virus (HIV), al- 
though health officials believed there might be as many as 500 HIV- 
positive cases in cdl of Finland. Reasons for the slight presence of 
this health problem were the low frequency of drug use and prosti- 
tution, an aggressive and frank public education campaign, and 
the trust Finns felt for the national health system, which led them 
to adopt practices it recommended. 

The most striking of all Finnish health problems was the high 
average mortality rate for males once they reached adulthood, which 
contributed to an average longevity in the mid-1980s of only 70. 1 
years compared with 73.6 years for Swedish males. In the second 
half of the 1970s, Finnish males over the age of twenty were 



131 



Finland: A Country Study 

one-third more likely to die by their sixty-fifth birthday than their 
Swedish neighbors. Cardiovascular diseases struck Finnish men 
twice as often as Swedish men. The three other chief causes of death 
were respiratory illnesses at twice the Swedish rate, lung cancer 
at three times the Swedish rate, and accidental or violent death 
at a frequency 50 percent higher than the Swedish figure. Health 
authorities have attributed the high mortality rates of the Finnish 
male to diet, excessive use of tobacco and alcohol, disruption of 
communities through migration, and a tradition of high-risk 
behavior that is particularly marked in working-class men in eastern 
Finland. 

Mortality rates for Finnish women, with the exception of women 
over sixty- five, compared well with those of the other Nordic coun- 
tries. A reason for this discrepancy between Finnish and other Nor- 
dic older women was the higher Finnish incidence of coronary 
problems, which occur later in women than in men. In the 
mid-1980s, Finnish women lived an average of 78.1 years, com- 
pared with 79.6 years for Swedish women. Except for coronary 
illnesses, of which Finnish women died 50 percent more often than 
their Swedish counterparts, the other causes of Finnish female mor- 
tality matched those of Sweden. In some cases, cancer and respira- 
tory diseases for example, Finnish women had an even lower rate 
of incidence. 

National efforts to improve living habits have included campaigns 
against smoking, restraints on the consumption of alcohol, and bet- 
ter health education in schools. One program that has been widely 
studied by international health officials was one implemented in 
the province of Pohjois-Karjala that aimed at reforming dietary 
habits in a region particularly hard hit by coronary iUnesses. Fin- 
land was also a participant in the World Health Organization's 
program Health for All by the Year 2000 and was its European 
reporting nation. 

Living Conditions 

By the 1980s, Finland enjoyed one of the highest living stan- 
dards in the world. It ranked eighth in the world with regard to 
per capita GDP, just behind the Federal Republic of Germany 
(West Germany) and slightly ahead of Canada. When measured 
against other countries, it almost invariably ranked among the 
world's best, whether economic, social, medical, educational, or 
political criteria were being applied. Finns were as surprised as they 
were pleased by this excellence, because for much of its history Fin- 
land had been poor and backward. Evidence of this could be found 



132 



View of Tapiola, a planned community outside of Helsinki 
Courtesy Embassy of Finland, Washington 

in the national anthem, which declared that Finland would always 
be poor. 

However weahhy Finland had become since the 1960s, observ- 
ers noted some shortcomings. In addition to the problem of rela- 
tively high mortality and the need for a more comprehensive 
child-care system, Finland faced serious environmental issues. 
Another long-standing problem was the standard of housing. 
Although improvements had occurred since the 1950s, thirty years 
later Finns were still not so well housed as their Nordic neighbors. 

Protection of the Environment 

Although Finland had a very low population density and was 
famed for its many areas of nearly untouched nature, it had not 
been spared environmental pollution. Some of this came from neigh- 
boring countries, such as the dose of radiation it received after the 
accident at the Chernobyl Nuclear Power Plant in the Soviet Un- 
ion in 1985. In this case, there was little damage because the radi- 
ation fell too far south to harm reindeer herds and fell too early 
to contaminate grasses and vegetables that have a late growing sea- 
son because of Finland's long winter. 

Domestic sources also contributed significantly to the country's 
problems with environmental pollution. The exceptionally strong 
growth rate of an economy based to a considerable degree on 



133 



Finland: A Country Study 

energy-intensive industries was a factor, as were the fertilizer- 
dependent agricultural sector and the wood-processing plants that, 
between them, contributed much to the pollution of Finnish rivers 
and groundwater. By the 1980s, Finland registered considerably 
higher sulfur and nitrogen emissions than other West European 
and Nordic countries, and its discharge of oxidizable matter into 
water was three times the average of the members of the Organi- 
sation for Economic Co-operation and Development (OECD — 
see Glossary). 

Finnish efforts to protect the environment began in the 1920s 
with the Nature Conservation Act of 1923, which allowed the 
establishment of nature preserves if they were needed. Since then 
there have been many laws covering different aspects of environ- 
mental protection, including water purity, control of poisons and 
pesticides, establishment of an oil pollution fund, waste manage- 
ment, prevention of marine and air pollution, and reduction of 
noise. 

An attempt to protect the environment more thoroughly was evi- 
dent in the formation of a ministry specifically pledged to this task. 
Established in 1983, the Ministry of Environment had four depart- 
ments, employing about 250 persons in all. One department dealt 
with administrative matters, while the other three were concerned 
with environmental protection and nature conservation, physical 
planning and building, and housing. In 1986 the National Board 
of Waters with its 1 ,400 employees was renamed the National Board 
of Waters and the Environment and was placed under the new 
ministry. 

In the mid- 1 980s, Finns were concerned about the environment, 
and a study found that only 1 1 percent of them would place eco- 
nomic growth above protection of the environment. Many believed 
ecological conditions were worsening. A 1983 poll found that only 
31 percent of those questioned — compared with 57 percent in 
1973 — believed their country's environment to be very good or 
excellent. Another indication of Finns' concerns was the birth in 
the early 1980s of a new political party, the Greens, which was 
remarkably successful in elections (see Smaller Parties and the 
Greens, ch. 4). Commitment to pollution control also was seen in 
the portion of research money going to environmental research, 
which compared well with that spent by other countries. Despite 
these measures, there were observers in the late 1980s who con- 
tended that Finnish efforts in this area needed further improvement. 

An OECD study published in 1988 held that, despite improve- 
ments, Finland still did not have an adequate environmental pro- 
gram. There was still no single law relating to the environment. 



134 



The Society and Its Environment 



and different ministries often did not consult sufficiently with one 
another about the ecological impact of their plans. Despite the 
existence of excellent statistics about damage to the environment, 
decision makers were often not well informed about them. Also 
lacking, according to the OECD report, was a sufficient assess- 
ment, when making plans for economic development, of the real 
costs of pollution. Recommended for a more economical defense 
of the environment were an exact consideration of these costs and 
an increased use of the "polluter pays" and "user fees" princi- 
ples. The report noted, too, that many local authorities lacked the 
expertise to deal properly with ecological decisions; moreover, be- 
cause they were suspicious of the power of provincial-level and 
national-level officials, they were reluctant to cooperate fully with 
them. 

Housing 

As part of its overcdl responsibility to supervise the nation's 
environment, the Ministry of Environment was charged with over- 
seeing what kinds of buildings and housing Finns worked in and 
lived in, arranging remedies for existing deficiencies, and guaran- 
teeing adequate conditions in the future. Two of the ministry's four 
departments, the Physical Planning and Building Department and 
the Housing Department, were created specificsdly for these tasks. 
In addition, the National Board of Housing, which had been created 
in 1966 to organize the state's administration of housing, was made 
subordinate to the ministry in 1986. 

Efforts to improve the housing of workers began in the nineteenth 
century, as did arrangements for low-interest mortgages. The 1920s 
saw the passage of the Housing Corporation Act and the estab- 
lishment of the Housing Mortgage Bank. It was only after World 
War II, however, that significant measures were undertaken to sub- 
sidize housing through what is known as Arava legislation. These 
laws were brought together in 1953 by the Housing Production 
Act, which became the basis of housing policy and which helped 
to foster the tremendous construction surge of the next two decades. 

By the 1980s, it was estimated that about 75 percent of Finnish 
residential dwellings of all types had been constructed since World 
War II. For some types of dwellings the figure was even higher. 
For example, some 70 percent of apartments were built after 1960. 
Migration, whether voluntary or not, and an upsurge in popula- 
tion growth had made this construction necessary. Population move- 
ments during the economic boom caused the first half of the 1970s 
to be the period of peak construction, when as many as 70,000 units 
were built in a single year. 



135 



Finland: A Country Study 

By the first half of the 1980s, about 48,000 units were built 
annually. In addition to a decline in building activity, the kinds 
of dwellings constructed changed. In the economic boom years, 
about two- thirds of new dwellings were apartments, and the 
remainder were free-standing houses or row houses. By 1980 the 
ratio was reversed. In addition, by the 1980s much construction 
work was for renovation, and government plans called for the num- 
ber of buildings restored each year to climb from 15,000 in 1980 
to 60,000 by the end of the 1990s. 

The construction boom meant that Finns were housed better than 
before. The number of dwelling units increased from 1.2 million 
in 1960 to 1.8 million in 1980 and gave them more room. Finnish 
dwellings were still rather small, however. In the 1980s, their aver- 
age size was sixty-nine square meters, nine square meters more 
than in 1970. Much poor standard housing had disappeared dur- 
ing the boom years. The new dwellings had modern conveniences; 
by 1980 nearly three-quarters of them — compared with only one- 
half a decade earlier — were fully equipped with hot water, indoor 
plumbing, central heating, and sewer connections. Although Fin- 
nish housing was still somewhat poorer than that of the other Nor- 
dic countries, it ranked well by world standards. 

About 60 percent of Finns owned their dwellings, and Finns 
spent, on the average, about 18 percent of their income on hous- 
ing. Government housing allowances helped people of low income 
to keep housing expenditures within 10 to 20 percent of this income. 
Government housing aid came in a number of forms, and it helped 
people in all income brackets. Housing allowances were paid to 
low-income groups and to pensioners living either in their own 
homes or in rental units. Low-interest loans were available to peo- 
ple earning modest incomes who desired to own their own homes. 
Better-off Finns benefited from tax relief if they had mortgages. 

Not all government housing policies were so popular as subsi- 
dies, low-interest loans, and tax relief, for some had unfortunate 
results. The housing program's most serious failure was seen in 
the often sterile and boring apartment house complexes and even 
whole suburban developments and towns that were designed and 
built in the postwar period to meet pressing housing needs. Some 
planned towns were internationally famed for the beauty of their 
design. An example was Tapiola, located on the outskirts of Hel- 
sinki. Many others, however, provided an ugly and inhumane 
environment for those obliged to live in them. Often situated far 
from needed services and lacking softening amenities, the bleak 
dormitory villages were desolate shelter for newly uprooted migrants 
from the countryside, and they fostered antisocial behavior, family 



136 



The Society and Its Environment 

problems, and illnesses. In later decades, authorities applied 
resources to these ill-conceived residential areas with the hope of 
making them more hospitable. 

Another problem, less serious, was a shortage of rental units. 
Some observers held that state rent-control policies had reduced 
the profits earned by landlords and hence had caused a scarcity 
of rental properties. The lack of available rental housing particu- 
larly affected young people, generciUy not yet able to purchase their 
own homes. 

* * * 

At the end of the 1980s, there was no single scholarly work in 
English that treated Finnish society as a whole. A number of Brit- 
ish works from the 1960s and the 1970s treat many aspects of Fin- 
nish society, but they are out of date, and they vary considerably 
in quality. Of these books, the most readily available and useful 
is Finland: An Introduction, edited by Sylvie Nickels and others. The 
1973 version of this work is available in an edition published in 
the United States. Patricia Slade Lander's In the Shadow of the Fac- 
tory: Social Change in a Finnish Community is valuable, but it relies 
on fieldwork done in the late 1960s and the early 1970s. A noted 
student of Finland is the geographer William Richard Mead, whose 
books Finland, How People Live in Finland (written for children). The 
Aland Islands (written with S. H. Jaatinen), and Winter in Finland: 
A Study of Human Geography (written with Helmer Smeds) all con- 
tain much useful information. Wendy Hall's The Finns and Their 
Country and John L. Irwin's The Finns and the Lapps are intelligent 
and popular treatments of Finnish life. 

Readers with Swedish could consult Samhdllet Finland, an essay- 
length work dating from 1985, by Finland's renowned sociologist, 
Erik Allardt. This brief survey of the developments that have trans- 
formed Finnish society in the twentieth century will give the reader 
an understanding of Finland as it was in the 1980s. A festschrift 
in his honor. Small States in Comparative Perspective: Essays for Erik 
Allardt, contains articles by leading specialists on topics such as the 
family in the Nordic countries, the premature mortality of Fin- 
nish males, social mobility, and the establishment of Finland's wel- 
fare system. This last subject is treated at greater length by Matti 
Alestalo and Hannu Uusitalo in their detailed and sophisticated 
article appearing in the first volume of the series Growth to Limits: 
The Western European Welfare States Since World War II, edited by Peter 
Flora. Matti Alestalo' s Structural Change, Classes and the State: Fin- 
land in an Historical and Comparative Perspective provides a learned 



137 



Finland: A Country Study 

exposition of the country's class structure. Nordic Democracy, edit- 
ed by Erik Allardt and others, treats Nordic Europe as a whole, 
but it contains much information about Finnish society. The 
detailed bibliographies accompanying these scholarly works will 
guide the curious reader further. 

Brochures and pamphlets published by the Finnish government 
in English are available from Finnish embassies around the world. 
These publications are quite informative about the welfare and the 
education systems, the role of women, and other aspects of Fin- 
nish society. 

Encyclopedic in its coverage of Finland is the series of atlases 
published by the Finnish government's National Board of Survey. 
The series' excellent maps graphically convey astonishingly detailed 
data about many aspects of Finnish society, and they are com- 
plemented by expert articles. English translations of the articles 
appearing in some of the atlases are available. (For further infor- 
mation and complete citations, see Bibliography.) 



138 



Chapter 3. The Economy 




Finnish ice-breaker at work 



FINLAND'S ECONOMY PERFORMED WELL during the 
1980s, allowing the Finns to enjoy widespread prosperity. After 
suffering the effects of depression and war during the 1930s and 
the 1940s, the economy started to show steady gains in about 1950. 
During the 1980s, the country enjoyed above-average growth, stable 
prices, and relatively low unemployment. Nevertheless, Finland 
did experience many of the problems found elsewhere in the in- 
dustrial world, including high unemployment among youth, 
expensive agricultural surpluses, and declining industrial sectors. 
Moreover, certain aspects of the country's economic performance, 
such as serious cyclical instability, endemic industrial conflict, and 
difficulties in foreign trade, may have troubled Finland more than 
such situations disturbed other countries. Despite these problems, 
which required attention from policy makers and from business- 
men, economists could point with pride to Finland's strong work 
ethic and pragmatic tradition. 

In a country lacking many raw materials, the tenacious Finns 
had learned to make the most of scarce natural resources. Although 
most of the country was not arable, farmers worked hard to keep 
the country self-sufficient in staple foods. The country's forests, 
carefully managed to increase long-term yield, provided raw materi- 
als for the wood-processing industries, the largest earner of for- 
eign exchange. Metals and minerals were scarce, but the country 
had established competitive enterprises in basic metals and in chem- 
icals. The metalworking industry, developed largely to meet repa- 
rations payments to the Soviet Union, continued to expand during 
the postwar period. This industry specialized in sophisticated 
products, such as icebreakers and paper-making machinery, in 
which the Finns enjoyed a comparative advantage. Faced with a 
serious energy shortage after the oil crisis of 1973, the Finns 
embarked on a comprehensive conservation program and shift- 
ed investments toward less energy- intensive, high-technology 
products. 

Effective policies deserved much of the credit for the country's 
economic successes. In the early years of the republic, the govern- 
ment had carried out extensive land reforms, a precondition for 
agricultural modernization. State-owned enterprises channeled 
investments into key industries, allowing the country to process 
its own raw materials. The crises of the depression, war, and recon- 
struction led to government controls that provided an essential 



141 



Finland: A Country Study 

framework for production. By the late 1950s, once wartime bot- 
tlenecks had been eliminated, the government chose to pursue trade 
liberalization and deregulation. Following this basic orientation, 
Finland's leaders agreed to free trade in industrial products, thus 
forcing the country's industries to compete and to modernize. By 
the late 1970s, macroeconomic policies gave priority to fighting 
inflation and to dampening cyclical instability. During the 1980s, 
government policies pursued export competitiveness, in part 
through favoring industrial rationalization and financial deregu- 
lation. By the mid-1980s, some economists saw Finland as the most 
capitalist country in Europe. 

To pay for needed imports, the Finns depended on export mar- 
kets in Western and in Eastern Europe. To protect those markets, 
Finland had pursued economic integration with both Eastern and 
Western Europe. The Finns maintained good commercial relations 
with the Soviet Union, a strategy that had paid off handsomely 
in the 1970s, when rising petroleum prices increased the value of 
trade with the East, compensating Finland for declines in Western 
markets. After the mid-1980s, however, as world oil prices declined, 
the Finns shifted toward the West, especiadly toward the Europe- 
an Community (EC — see Glossary). Although balancing close eco- 
nomic relations with both market-oriented and planned economies 
posed special challenges, Finnish traders proved adept in both 
environments. In the late 1980s, industry and finance sought to 
build on earlier successes by internationalizing their operations, 
often in partnership with foreign firms. 

In the late 1980s, the most important economic challenge was 
to keep both production costs and product quality competitive in 
international markets. This challenge would require hard work, 
as well as close cooperation among government, business, and labor. 
The government, industry, and the universities needed to increase 
spending on research and the development of new technologies. 
The Finns would also have to limit inflationary wage increases and 
improve labor flexibility without worsening labor conflict. Many 
economists believed, however, that the prevailing consensus in favor 
of modernization and stable, steady growth was strong enough to 
allow the country to face the future with optimism. 

Growth and Structure of the Economy 

During the seven decades after the establishment of the repub- 
lic in 1917, Finland made remarkable economic progress. At the 
time of the collapse of the Russian Empire in 1917, the Grand 
Duchy of Finland had the most backward economy in Nordic 
Europe. Situated at the outer edges of the spheres of influence of 



142 



The Economy 



the major European industrial powers — Britain, Germany, and 
Sweden — newly independent Finland appeared destined to remain 
a poor, peripheral area. By the late 1980s, however, the country 
had become one of the world's advanced industrial societies, the 
citizens of which enjoyed a high standard of living and the indus- 
tries of which dominated world markets for significant high- 
technology products. Finland was an industrial society, but it was 
self-sufficient in staple foods and produced a wide range of goods 
and services for domestic and export markets. Although the econ- 
omy still depended on exports, the Finns had developed markets 
in both Eastern and Western Europe, avoiding excessive depen- 
dence on any single market. 

Economic Development 

Material conditions were difficult at the birth of the Finnish 
republic. The country's industries had started to develop after about 
1860, primarily in response to demand for lumber from the more 
advanced economies of Western Europe, but by 1910 farmers still 
made up over 70 percent of the work force. Finland suffered from 
food shortages when international trade broke down during World 
War I. The fledgling metal-working and shipbuilding industries 
expanded rapidly to supply Russia during the early years of the 
conflict, but the empire's military collapse and the Bolshevik Revo- 
lution in 1917 eliminated trade with the East. The Finnish civil 
war cind the subsequent massacres of the Reds spawned lasting labor 
unrest in factories and lumber camps, while the plight of landless 
agricultural laborers remained a pressing social problem (see 
Independence and the Interwar Era, 1917-39, ch. 1). 

During the immediate postwar years, Finland depended on aid 
from the United States to avoid starvation, but by 1922 industrial 
production had reached the prewar level. While trade with the 
Soviet Union languished for political reasons. West European, 
especially German, markets for Finnish forest products soon 
reopened. In exchange for lumber, pulp, and paper — which 
together accounted for about 85 percent of exports — Finland 
obtained needed imports, including half the nation's food supply 
and virtually all investment goods. 

Despite political instability, the state built a foundation for growth 
and for greater economic independence. The first and most 
important step was an agricultural reform that redistributed hold- 
ings of agricultural and forest land and strengthened the class of 
smallholders who had a direct stake in improving farm and forest 
productivity. The government also nationalized large shares of the 
mining and the wood-processing industries. The subsequent public 



143 



Finland: A Country Study 

investment program in mines, foundries, wood and paper mills, 
and shipyards improved the country's ability to process its own 
raw materials. By the late 1920s, agricultural modernization was 
well under way, and the country had laid the foundations for future 
industrialization . 

Although Finland suffered less than more-developed European 
countries during the Great Depression of the 1930s, the country 
nonetheless experienced widespread distress, which inspired fur- 
ther government intervention in the economy. Comprehensive pro- 
tection of agricultural produce encouraged farmers to shift from 
exportable animal products to basic grains, a policy that kept farm 
incomes from falling as rapidly as they did elsewhere and enabled 
the country to feed itself better. Similar policies spurred produc- 
tion of consumer goods, maintaining industrial employment. As 
in other Nordic countries, the central bank experimented with 
Keynesian demand-management policies. 

In the 1930s, Britain replaced Germany as Finland's main trading 
partner. The two countries made bilateral agreements that gave 
Finnish forest goods free access to British markets and established 
preferential tariffs for British industri2d products sold to Finland. 
Consequendy, Finland's largest industry, paper production, 
expanded throughout the depression years (although falling prices 
led to declining export revenues). The economic growth of Fin- 
land resumed in 1933 and continued until 1939. 

Production and employment had largely recovered from the 
effects of the depression when the Winter War began in 1939. The 
struggle marked the beginning of five years of warfare and priva- 
tion. By 1944, after two defeats at the hands of the Soviet Union 
and severe losses suffered while expelling German troops, Finland's 
economy was nearly exhausted. Under the terms of the 1944 
armistice with the Soviet Union, the country ceded about 12 per- 
cent of its territory, including valuable farmland and industrial 
facilities, and agreed to onerous reparations payments. To many 
Finns, it appeared that most of the achievements of the interwar 
years had been undone (see World War II, 1939-45, ch. 1). 

Postwar reconstruction proved difficult. Resetding refugees from 
the areas ceded to the Soviet Union required another land reform 
act, subsidies for agricultural infrastructure, and support payments 
for displaced industrial workers. Reparations deliveries to the Soviet 
Union absorbed much of the country's export potential. The need 
to remain politically neutral precluded participation in the Mar- 
shall Plan (European Recovery Program), but Finland arranged 
substantial loans from the United States Export-Import Bank to 
finance expansion in the forest industries. High inflation rates 



144 



The Economy 



inherited from the war years fed labor miUtancy, which further 
threatened output. 

Despite these setbacks, the tenacious Finns soon fought their way 
back to economic growth. Reparations turned out to be a blessing 
in disguise — at least for the metalworking industries, which sup- 
plied about three-fourths of the goods delivered to the Soviet Union. 
In effect, forced investment in met2dworking laid the foundations 
for Finland's later export successes. The fulfillment of the repara- 
tions payments in 1952 symbolized the end of the postwar difficul- 
ties, but the real turning point probably came in about 1950, with 
the Korean War boom in the West. During the 1950s, the metal- 
working industries continued to export to the Soviet Union, a mar- 
ket in which the Finns faced virtually no competition from other 
Western countries. Extensive borrowing in Western financial 
markets — especially in Sweden and in the United States — financed 
investments in infrastructure, agriculture, and industry. The con- 
sumer goods and construction sectors prospered in the booming 
domestic market, which remained protected by import controls until 
the end of the decade. 

From 1950 to 1974, Finland's gross national product (GNP — 
see Glossary) grew at an average annual rate of 5.2 percent, con- 
siderably higher than the 4.4 percent average for members of the 
Organisation for Economic Co-operation and Development 
(OECD — see Glossary). However, partly as a result of continued 
dependence on volatile lumber exports, this growth was more 
unstable than that in other OECD countries. The business cycle 
caused fluctuations in output that averaged 8 percent of gross 
domestic product (GDP — see Glossary). Finland's structural trans- 
formation was brutally quick, driving workers out of agriculture 
more quickly than had been the case in any other Western coun- 
try. Although manufacturing output increased sharply, many dis- 
placed farm workers could not be placed in industry. At the same 
time, Finnish inflation, which tended to exceed that of the coun- 
try's major trading partners, necessitated regular currency devalu- 
ations. Yet, despite the costs of economic growth, most Finns were 
happy to have escaped the hardships of the depression and the war 
years. 

Rapid structural transformation led to innovative economic poli- 
cies. During the 1950s, the state had maintained strict controls on 
many aspects of economic life, protecting the country's fragile eco- 
nomic balance, but it had lifted many restrictions by the end of 
the decade. Moreover, in 1957 policy makers chose to liberalize 
foreign trade in industrial goods, strongly influencing future eco- 
nomic developments. The achievement of prosperity in the 1960s 



145 



Finland: A Country Study 

made possible the extension of the welfare state, a development 
that did much to reduce tensions between workers and manage- 
ment (see Finland in the Era of Consensus, 1966-81, ch. 1). Fin- 
land's increased foreign trade made industrial competitiveness more 
important, causing greater interest in restraining the inflationary 
wage-price spiral. Starting in 1968, the government succeeded in 
sponsoring regular negotiations on wages, benefits, and working 
conditions (see Human Resources, this ch.). The political consen- 
sus that developed around incomes settlements helped to slow in- 
flation and to increase productivity. Liberalization, welfare 
programs, and incomes policy thus helped to maintain economic 
growth during the 1960s and facilitated stronger economic rela- 
tions with both Eastern and Western Europe. 

In the 1970s and 1980s, changes in domestic and international 
economic conditions posed new challenges. At home, Finland was 
reaching the limits of extensive economic growth. Expansion was 
incorporating ever- greater amounts of raw materials, capital, and 
labor in the production process. The economy needed to shift to 
intensive growth through better resource management, improved 
labor productivity, and newer technologies. In international mar- 
kets, the oil crises of 1973 and 1979 caused particular difficulties 
for the Finns, who imported over 80 percent of their primary energy 
supplies. The country did suffer less than other West European 
countries from increased oil prices because of its special trading 
relationship with the Soviet Union, which supplied petroleum in 
exchange for Finnish industrial goods. However, recession in 
Western markets, growing technological competition, and tighter 
financial markets made Finland's traditional cycles of inflation and 
devaluation untenable. Thus, although the country managed to 
delay austerity measures for five years, in 1978 balance-of-payments 
considerations compelled the government to introduce a far- 
reaching reform package designed to ensure the competitiveness 
of Finnish industry in world markets (see Role of Government, 
this ch.). 

Although the austerity package pursued after 1978 slowed growth 
in personal consumption, the consensus approach to wage and 
benefit negotiations remained reasonably intact. In addition, many 
Finnish workers proved sufficiently flexible to accept transfers from 
declining sectors to those in which the country enjoyed a compara- 
tive advantage . As a result of competent macroeconomic manage- 
ment and favorable trading relations with both Eastern and Western 
Europe, Finland was able to sustain growth in GDP at an average 
annual rate of about 3.3 percent from 1980 to 1986 — a rate well 
above the OECD average. 



146 



The Economy 



During the 1980s, structural developments in the Finnish econ- 
omy paradleled those in other West European economies. Although 
surplus production of ainimail products plagued agriculture and led 
to cutbacks in agricultural subsidies, the country preserved family 
farming. Policy makers continued to monitor forestry, energy, and 
minerad resources closely, even when falling petroleum prices 
reduced pressures on the economy. Industry underwent intensive 
restructuring, eliminating many inefficient producers and con- 
solidating he2dthy enterprises. Despite mergers and rationalization, 
Finland lost fewer industrial jobs than most OECD countries, so 
that unemployment was held below the double-digit levels com- 
mon elsewhere on the continent. Private services, especially banking 
and insurance, expanded more rapidly than other sectors, also help- 
ing to limit unemployment. 

Structure of the Economy 

By 1986 postwar economic growth had raised Finland's GDP 
to about US$70.5 billion, making the country one of the most 
prosperous in the world. Economic expansion over the years had 
substantially altered the structure of the economy (see fig. 14; fig. 
15; table 13, Appendix A). By 1986 agriculture, forestry, and fishing 
had fallen to a little under 8 percent of GDP from nearly 26 per- 
cent in 1950. Industry, including mining, manufacturing, construc- 
tion, and utilities, accounted for about 35 percent of GDP, down 
from about 40 percent in 1950. Within industry, metalworking had 
grown most rapidly, its output almost equalling that of wood 
processing by the late 1970s. In the late 1980s, industrialists looked 
forward to a shift toward electronics and other high-technology 
products. 

While agriculture and industry had declined in relative terms 
during the postwar years, the service sector had grown from about 
34 percent of GDP to almost 58 percent, leading some observers 
to characterize Finland as a postindustrial society. Several factors 
accounted for the expansion of the service sector. Government, very 
small under the Russian Empire, grew rapidly between the Great 
Depression and the early 1970s as the state took responsibility for 
an increasingly greater share of economic life. In addition, trans- 
portation, communications, engineering, finance, and commerce 
became more important as the economy further developed and 
diversified. 

Control and ownership of Finland's economic life were highly 
concentrated, especially after the industrial and financial restruc- 
turing of the 1980s. Thus, by 1987 three firms controlled most ship- 
building, a small number of woodworking enterprises dominated 



147 



Finland: A Country Study 




The Economy 




Finland: A Country Study 

the forest industries, and two main commercial banks exercised 
wide-reaching influence over industrial development. Large state- 
owned firms provided most of the energy, basic metals, and chem- 
icals. The country's farmers, workers, and employers had formed 
centralized associations that represented the vast majority of eco- 
nomic actors. Likewise, a handful of enterprises handled most trade 
with the Soviet Union. Some observers suggested that the trend 
toward internationalization might increase the influence of foreign 
firms and executives in Finnish enterprises, but this effect would 
make itself felt slowly. Thus, while Finland remained a land of 
family farms, a narrow elite ran the economy, facilitating decision 
making, but perhaps contributing to the average worker's sense 
of exclusion, which may have contributed to the country's endemic 
labor unrest. 

Role of Government 

As in most European countries that were late in industrializing, 
the Finnish state played an important role in sponsoring econom- 
ic development. Thus, in the interwar years, the government car- 
ried out crucial agricultural reforms and established pioneering 
industrial enterprises. During World War II, the government im- 
posed comprehensive economic controls to support the defense ef- 
fort, many of which remained in force during the reconstruction 
years. Starting in the 1950s, however, as economic growth over- 
came production bottlenecks and shortages of consumer goods, the 
government gradually relaxed the regulatory framework. Neverthe- 
less, wartime intervention in the economy had left institutional lega- 
cies that influenced later economic policies. 

The need to maintain export markets in Western Europe, itself 
engaged in a process of economic integration by the late 1950s, 
led the government to decide to liberalize trade in industrial 
products. Free trade, in turn, undermined the government's abil- 
ity to isolate the domestic economy from world market conditions. 
Increasingly tied to the economies of the Nordic area and Western 
Europe, Finland was constrained to adopt policies similar to those 
in force elsewhere. Although the policy packages varied in response 
to domestic political developments and international market shifts, 
they all took into account Finland's position as a small, relatively 
open economy, in which fluctuations in raw material exports had 
a significant impact on the business cycle. By the late 1980s, when 
exports and imports each accounted for about one-quarter of GDP, 
export competitiveness had become the dominant policy concern. 

Some analysts saw in Finnish economic management a liberal, 
noninterventionist variant of the economic polices of other Nordic 



150 



The Economy 



states. Thus, Finland, less prosperous than its Western neighbors, 
did not develop a comprehensive welfare state until the late 1960s, 
and it held benefits below the Scandinavian average (see Growth 
of the Social Welfare System, ch. 2). Like other Nordic states, Fin- 
land had institutionalized wage and benefit negotiations, but the 
Finnish system of industrial relations involved substantially more 
conflict than the systems in the Scandinavian states (see Human 
Resources, this ch.). Along the same lines, Finl2ind protected domes- 
tic agriculture, but generally avoided bailing out declining indus- 
trial concerns, favoring measures to facilitate structural adjustment. 
Finnish politicians, some of whom saw Sweden as a model, claimed 
that their neighbor's mistakes had taught them to avoid excessive 
welfare programs and industrial subsidies that would slow adap- 
tation to new market conditions. Foreign analysts noted, however, 
that special factors, such as Finland's relatively late industrial 
development and the role of Finland's trade with the Soviet Union, 
2ilso helped to explain deviations from the general Nordic pattern. 
By the 1980s, as austerity policies spread throughout the region, 
aspects of Finnish policy seemed to lead rather than to follow Nor- 
dic developments. 

Despite the laissez-faire slant of Finnish economic policy, direct 
state intervention strongly influenced operating conditions in many 
sectors. In agriculture, for example, years of government support 
and tariff protection had sustained a relatively large rural popula- 
tion that expected continued aid regardless of the need to cut farm 
surpluses (see Agriculture, this ch.). Similarly, the state had 
established enterprises in capital-intensive, high-risk sectors, 
including energy, minerals, basic processing, and manufacturing 
in which private investment had proven inadequate. By the 
mid-1980s, private capital markets were relatively well-developed, 
but the twenty state enterprises still accounted for some 21 per- 
cent of industrial production, and they included many of the coun- 
try's leading firms, such as the Kemira Group in chemicals, 
Enzo-Gutzeit in wood processing, the Valmet Group in engineer- 
ing and shipbuilding, and Valvilla in textiles. Yet industrial policy 
no longer depended on state ownership, and these enterprises func- 
tioned much as private companies. Indeed, starting in the early 
1980s, the Ministry of Trade and Industry, which was responsible 
for state enterprises, began to demand that they earn profits. The 
state maintained monopolies in alcoholic beverages, energy (Neste 
and Imatran Voima), and minerals (the Outokumpu Group and 
Rautaruukki) for political reasons, but divestment in other sectors 
was a possibility. In 1988 the government decided to allow certain 
state enterprises to sell shares. The Valmet Group was the first state 



151 



Finland: A Country Study 

firm to announce plans for a stock offering, and observers reported 
that Outokumpu, Kemira, and Neste were also candidates for par- 
tial privatization, depending on how well the Valmet stocks sold. 
The government planned to retain controlling interests in the com- 
panies for at least several years, but some politicians favored com- 
plete privatization. 

Privatization and deregulation were ways to dismantle the rel- 
ics of earlier economic policies and to release public resources for 
other purposes. In the late 1980s, government interest concentrated 
on speeding rationalization and restructuring, even at the cost of 
higher unemployment Eind greater industrial concentration. Indus- 
trial policy sought to foster a shift away from heavy engineering 
toward electronics and high- technology production. The state 
sharply increased expenditures for research and development, and 
it helped coordinate efforts among universities, private industry, 
and government research centers (see Industrial Policy, this ch.). 
The government and the Bank of Finland (BOF), Finland's cen- 
tral bank, gradually deregulated the financial sector in an effort 
to improve the efficiency of capital markets (see Banking and 
Finance, this ch.). Thus, although the state continued to control 
certain key sectors, such as agriculture, forestry, minerals, and ener- 
gy, overall economic policy had shifted from sectoral intervention 
toward efforts to improve productivity and market efficiency. 

Macroeconomic Policy 

During the 1960s and 1970s, government policy had pursued 
rapid economic growth and high investment in industry, often to 
the detriment of price stability. By the mid-1960s, the government, 
generally in concert with the BOF, which controlled monetary and 
exchange-rate policy, established a macroeconomic approach with 
fixed roles for monetary, fiscal, incomes, and exchange-rate poli- 
cies. In general, monetary policy aimed at keeping interest rates 
low to favor domestic investment. The BOF imposed strict con- 
trols on capital exports, which made possible negative real interest 
rates, 2ind rationed credit to the commercial banks, which controlled 
most investment. The perceived need to balance budgets, usually 
annually, handicapped fiscal policy. The government used incomes 
policy to influence wage settlements, often offering tax breaks in 
exchange for concessions from management and labor, but incomes 
policy was rarely coordinated with the general macroeconomic 
strategy. Exchange-rate policy was dedicated to safeguarding 
industrial competitiveness. 

Although this policy package favored growth, high employment, 
and industrial development, the economy suffered from greater 



152 



The Economy 



inflation and instability than those of other OECD countries. PubUc 
spending remained under firm control, but low interest rates and 
tax cuts fueled domestic inflation. At roughly ten-year intervals, 
Finland experienced export-led booms followed by major devalu- 
ations and severe recessions. Fluctuations in world demand for Fin- 
nish exports were largely responsible for the cycles, but economic 
policies magnified them. Typically, a period of overheating in the 
economy, occasioned by an upswing in exports and by the rela- 
tively inelastic supply of exportable commodities, led to sharp 
increases in wages and prices in the export sector as well as to greater 
imports of investment goods. Faced with declining export competi- 
tiveness and a worsening external balance, the authorities responded 
with major currency devaluations (24 percent in 1967; 10 percent 
in 1977-78) and with tighter macroeconomic policies, which damp- 
ened domestic demand but restored competitiveness. Output re- 
covered following each devaluation, only to decline as domestic 
inflation rocketed higher, further eroding competitiveness in exter- 
nal markets. 

Although Finland mamaged to avoid restructuring traditional poli- 
cies until several years after the 1973 oil crisis, an especially severe 
downturn in the second half of the 1970s, caused largely by reces- 
sion in West European markets, inspired a new policy approach. 
Starting in 1977, with the adoption of a five-year stabilization pro- 
gram, the government began to give priority to fighting inflation 
and to overcoming the devaluation cycle, even at the cost of higher 
unemployment and slower growth in the short run. 

The new macroeconomic framework involved changing the tradi- 
tional assignments for each policy tool. Perhaps the most impor- 
tant innovation was a more active role for fiscal policy. Given the 
low level of Finnish state debt, policy makers stopped requiring 
that the budget balance each year, and they aimed instead for a 
balanced budget over the life of the business cycle. Fiscal policy 
became consciously countercyclicad, and increased spending dur- 
ing the 1982-83 slowdown was followed by tax increases in the 
1984-85 upswing. In addition, the authorities adjusted tax rates 
not only to moderate wage demands but also to affect investments 
and export competitiveness. The implementation of monetary policy 
shifted from offering negative interest rates in a protected capital 
market to using interest rates to dampen inflation and to influence 
the exchange rate. Monetary policy came to depend even more 
on market operations by the mid-1980s, as deregulation of finan- 
cial markets eliminated the earlier system of capital rationing. The 
tighter monetary stance tended to reduce the volume of investment, 
but economists expected that the quality of investments would 



153 



Finland: A Country Study 



improve. After 1977 the BOF attempted to peg the external value 
of the Finnish mark to a trade-weighted "basket" of foreign cur- 
rencies. The new exchange-rate policy was meant to curtail both 
domestic and imported inflation. Indeed, in 1979 and 1980, the 
currency was allowed to appreciate for the first time in the post- 
war period in response to greater export demand. Policy makers 
hoped that the stable exchange rate would eliminate distortions 
caused by an undervalued or overvalued currency and would allow 
market conditions to determine investment decisions. 

The new approach to managing the economy still depended on 
negotiated incomes settlements to restrain wage growth and to 
dampen inflation. The government continued to try to influence 
agreements between capital and labor by means of fiscal or other 
incentives. Implementing such sophisticated policies required 
extensive coordination and cooperation among government 
ministers belonging to different parties, the BOF, and leaders in 
agriculture, industry, and labor. Although differences among 
interest groups continued to exist and sometimes resulted in seri- 
ous conflicts, the country enjoyed widespread consensus regard- 
ing the desirability of medium-term stabilization. It was this 
consensus — and the macroeconomic policies it made possible — 
that deserved much of the credit for Finland's relatively strong eco- 
nomic growth, low unemployment, and price stability. 

Public Finance 

As of 1987, public-sector spending amounted to about 42 per- 
cent of GDP, below the OECD average. Austerity policies had 
limited real budget increases to about 1 . 5 percent per annum from 
1980 to 1987, substantially less than the rapid growth in govern- 
ment spending during the 1960s and 1970s (see table 14, Appen- 
dix A). Total taxes amounted to about 36 percent of GDP in 1987, 
fluctuating by a few percentage points from year to year. Because 
of the gap between taxes and spending, government debt grew rela- 
tively rapidly during the 1980s, reaching almost 15 percent of GDP 
by 1987, but it was still low by OECD standards. 

Each autumn the Ministry of Finance submitted to the 
Eduskunta, the country's parliament, the budget for the next fis- 
cal year (which corresponded to the calendar year), accompanied 
by a survey of the economic situation. Early in the following spring, 
while the budget was being debated, the ministry published a revised 
version of the survey, which estimated the over2ill fiscal impact on 
aggregate demand, income, and money supply. After parliamen- 
tary approval of the annual budget, the government often responded 
to changing conditions by requesting supplementary appropriations. 



154 



The Economy 



sometimes significantly modifying the original budget. 

Starting in the late 1970s, as it sought to maintain tight limits 
on the growth of the public sector, the government, in its fiscal 
policy considerations, began to analyze social security funds and 
local spending as parts of the overall budget. The central govern- 
ment regularly transferred large sums to local authorities, which 
accounted for about two-thirds of public-sector operations. Local 
administrations levied a flat tax, which had reached about 16 per- 
cent in 1986, on earned income. The central government influenced 
local expenditures by regulating transfers and by negotiating 
multiyear spending limits. Nevertheless, current local government 
expenditures, many of which were required by law, sometimes 
exceeded targets. The central government also attempted to 
manipulate social security taxes as an instrument of fiscal policy, 
a technique that Finland had pioneered . The government lowered 
employers' contributions for health, accident, and unemployment 
insurance by about 2 percent of the wage bill between 1977 and 
1987 in an attempt to encourage job creation. 

National taxes absorbed about 26 percent of GDP, and local 
taxes, roughly 16 percent, in the mid-1980s. In 1986 the govern- 
ment introduced reforms of business income taxes, including a 
reduced value-added tax on energy, designed to improve export 
competitiveness. In 1988 the legislature enacted a comprehensive 
tax reform meant to reduce marginal rates of taxation after eliminat- 
ing many deductions. Policy makers expected that the 1988 reform 
would reduce tax-induced distortions in investment behavior and 
would make the tax system fairer. 

Government spending had changed significandy during the post- 
war years. In the late 1940s and early 1950s, temporary expendi- 
tures associated with the war dominated the budget. From the early 
1950s to the early 1970s, the fastest- growing sectors in the budget 
were education, social welfare transfers, and capital investments. 
By the late 1980s, current expenditures remained roughly the same 
as in the 1970s, but investments had fallen. In 1987, for example, 
debt service led expenditures (at about 17.2 percent of total out- 
lays), followed closely by social security (17.1 percent) and educa- 
tion, science, and the arts (16 percent). Government operations 
and defense amounted to about 14.7 percent, and health, to 8 per- 
cent. Except for agriculture and forestry (which absorbed 8.3 per- 
cent) and transport (8 percent), subsidies for different branches of 
the economy took relatively small amounts: housing, 4.4 percent; 
industry, 3.4 percent; and labor, 2.5 percent. 

Finland's state debt, at about 14 percent of GDP in 1987, was 



155 



Finland: A Country Study 

low by international standards, as was the debt of local govern- 
ments, which stood at roughly 3 percent. Nevertheless, during the 
1980s the government tried to limit the growth of state debt to avoid 
increased interest expenditures. As of 1987, sUghtly more than half 
the state debt was in foreign currencies. When the state sought 
financing abroad, it avoided crowding out private borrowers in Fin- 
land's relatively shallow capital market, but foreign debt increased 
foreign-exchange risk. In 1986 and 1987, however, officials took 
advantage of their government's high credit rating to refinance 
much of the debt at lower interest rates. Although policy makers 
would have to manage the debt carefully, most an2ilysts believed 
it was unlikely that Finland's state debt would seriously constrain 
government operations during the late 1980s and early 1990s. 

Human Resources 

Finland's work force was the country's most valuable economic 
asset; managing it posed the greatest challenges to both business 
and government. Like most European countries, Finland suffered 
from unemployment, but employers reported difficulties in find- 
ing qualified workers. Although the country boasted a consensual 
approach to industrial relations, strikes often interrupted produc- 
tion. Likewise, Finland's workers enjoyed a high standard of liv- 
ing, but regular wage increases contributed to domestic inflation, 
worsened unemployment, and exacerbated balance-of-payments 
difficulties. Business often granted seemingly excessive wage 
increases, yet alienated workers through adamant opposition to 
increased democracy in the workplace. Government policies ad- 
dressed labor problems with only limited success. 

Employment 

In 1 986 the civilian labor force numbered a little more than 2 . 5 
million, of which about 5.4 percent were unemployed (see table 
15, 1950-85, Appendix A). Less than 1 1 percent of the work force 
worked in agriculture and forestry (down from over 45 percent in 
1950). Employment in industry and construction cimounted to about 
32 percent, while the service sector employed a little over 57 per- 
cent. Finland's employment structure resembled that of other Eu- 
ropean countries, except that agricultural employment was still 
higher than the West European average, and industrial employ- 
ment had fallen more slowly in Finland after the 1973 oil crisis than 
it had elsewhere. Economists suggested that both phenomena 
reflected Finland's relatively late industrialization and that the coun- 
try could expect further declines in the employment shares of 
agriculture and industry. 



156 



The Economy 



As in most European countries, general unemployment became 
a serious problem during the 1970s, rising from about 1.8 percent 
in 1974 to an average of about 5.7 percent between 1980 and 1986. 
Official statistics showed that unemployment had fallen to 5.5 per- 
cent for the first half of 1987, but this figure had resulted from 
redefining unemployed workers over 55 years of age as retired. The 
number of unemployed persons actually had barely changed 
between 1986 and 1987. Despite economic growth, during the early 
1980s total demand for labor stagnated, but the working-age popu- 
lation increased by an average of 1 .2 percent each year. Economists 
estimated that real GDP would need to rise by over 3 percent per 
year in the late 1980s and early 1990s just to keep up with the grow- 
ing work force. 

While unemployment was less severe in Finland than it was in 
most European countries, policy makers considered the job short- 
age to be the country's main economic problem. Young people 
suffered most from the rise in unemployment. In the late 1980s, 
the unemployment rate for people between the ages of fifteen and 
twenty-four was almost twice the overall average. The aging of the 
population would tend to reduce the youth unemployment rate in 
the 1990s, but observers predicted that the total population of 
working-age persons would continue to rise for at least a decade 
and that unemployment would be a serious problem. 

Although many workers could not find jobs, some employers 
reported difficulties in finding skilled industrial workers; in par- 
ticular, construction and service workers were hard to find in the 
booming Helsinki area. Although certain skills might be in short 
supply, the work force genersdly was competent and hardworking. 
Indeed, during the postwar years, the number of Finns with voca- 
tional training had increased fourfold, and the number of univer- 
sity graduates had increased fivefold (see Education, ch. 2). The 
graduates of Finland's management schools were well prepared to 
meet the challenges posed by an increasingly international busi- 
ness environment. Some managers argued that young Finns showed 
more initiative on the job than their parents. 

The government tried to cope with unemployment, focusing on 
youth joblessness. Aside from expanding public employment, gener- 
ally seen as a stopgap, state efforts included retraining programs 
for unemployed workers, advanced vocational training, travel and 
resettlement allowances, and subsidies for housing in areas with 
labor shortages. A particularly effective mechanism was the nation- 
wide employment exchange, which brought together people seek- 
ing employment with potential employers. In the long run, however, 
such measures could only serve as palliatives. Analysts believed 



157 



Finland: A Country Study 

that the state could best increase employment by following sound 
macroeconomic policies and by facilitating cooperation among the 
organizations representing labor and management. 

Industrial Relations 

Although trade unionization had started somewhat later in Fin- 
land than it had throughout the rest of the continent, in the 1980s 
the country's workers and employers were the most highly organized 
in Western Europe. According to the Ministry of Labor, about 
80 percent of the work force belonged to unions, although the rate 
varied significantly among industries. Employers' federations also 
represented most enterprises (see Interest Groups, ch. 4). 

Conflict between labor and management was fierce during the 
interwar years because tensions resulting from the civil war had 
soured industrial relations. Labor-management collaboration im- 
proved in 1940 when the Central Organization of Finnish Trade 
Unions (Suomen Ammattiyhdistysten Keskusliitto — SAK) and the 
Confederation of Finnish Employers (Suomen Tyonantajain 
Keskusliitto — STK) recognized each other and agreed to cooper- 
ate during the national emergency. Industrial relations languished 
immediately after World War II, however, in part because govern- 
ment regulations tied wages to the cost-of-living index. Despite a 
general strike in 1956, occasioned by conflicts of interest among 
farmers, workers, and management, a spirit of compromise gradu- 
ally developed in the late 1950s and early 1960s. 

Finland's industrial relations took an important turn for the better 
in 1968, when a system of centralized incomes agreements was 
instigated by the government, which hoped to curb inflation and 
improve competitiveness after a major currency devaluation. After 
that date, regular negotiations, involving the government, labor, 
and employers, led to central agreements on wages, benefits, work 
conditions, and social policy. Negotiations usually started in the 
fall and ended in March. Senior civil servants acted as mediators 
between labor and management. The government often offered 
concessions, such as tax reductions, longer vacations, or reduced 
employer social security contributions, in exchange for wage re- 
straint or increased investment. The central agreement among the 
national federations was not binding on individual unions. In prac- 
tice, however, the central agreement provided guidelines for con- 
tracts made between unions and employers or, if necessary, between 
workers and management at individual factories. Contracts affecting 
civil servants and professioneds were usually negotiated after set- 
tlements in industry, as were settlements concerning prices paid 
for agricultural commodities and lumber. In this way, wages in 



158 



The Economy 



private enterprises exposed to international competition influenced 
the protected sectors of the economy. 

Many observers feared renewed labor conflict during the 1980s 
as slower growth, stiff foreign competition, and austerity policies 
put pressures on the negotiation process. Strikes did occur, most- 
ly during the spring negotiation season. In 1986, for example, 
unions representing sadaried employees, technicians, and profes- 
sional personnel accepted the central agreement, but SAK held out 
for shortened work hours. When the STK demanded greater flex- 
ibility in setting work schedules in exchange for the proposed reduc- 
tion in work time, SAK responded with the first general strike since 
1956. As a result, SAK gained a larger wage increase than the other 
federations and a provision that by 1990 would reduce the work 
week in industry to 37.5 hours. Moreover, a number of local unions 
refused to follow the central agreement, preferring to negotiate on 
their own. 

In 1988 the government was unable to implement a national 
agreement, largely because of opposition from employers. Unions 
and employers reached agreements industry by industry, generally 
following the settlement reached in the paper industry. In this 
industry, blue-collar workers had achieved wage increases of about 
4 percent for the first year of their two-year agreement, while white- 
collar workers had received higher raises; the parties had agreed 
to delay negotiations for the second year. Although its proposals 
had been rejected, the government still intervened in the negotia- 
tion process by introducing legislation on retraining programs, secu- 
rity against dismissal, and worker representation on company 
boards. The fact that important service branches, such as bank- 
ing, insurance, and trade, had opted for multiyear agreements in 
which wage increases were to be negotiated a year at a time, fur- 
ther indicated that the centralized negotiation process was becom- 
ing fragmented. Despite these apparent setbacks, most Finns 
supported an incomes policy as a way to restrain wages, thereby 
protecting real earnings. 

Despite widespread consensus on incomes policy, Finland con- 
tinued to experience more strikes and lockouts than other Nordic 
states. In principle, Finnish legislation blocked strike actions dur- 
ing periods governed by incomes agreements. Moreover, accord- 
ing to the law regulating strikes, unions were required to give two 
weeks' notice to both employers and the state before initiating a 
strike, and the government could delay a strike and could require 
mediation. Despite these controls, illegad work stoppages occurred 
regularly, often involving small, but well-placed, groups of work- 
ers. In 1986, for example, air traffic controllers shut down the 



159 



Finland: A Country Study 



Helsinki airport for two weeks. The number of strikes had declined, 
however, after 1984, when the central incomes agreement had 
included a ninefold increase in the fines for illegal strikes. 

Agriculture^ Forestry^ and Fisheries 

The Finns traditionally earned their living from the produce of 
their soils and waters. Even though by the 1980s Finland had long 
been an industrial country, many Finns continued to see the hard- 
working farmer as an upright figure whose way of life should be 
preserved so the country would not lose contact with its rural roots. 
Agriculture, forestry, and fisheries had shrunk to less than 10 per- 
cent of GDP by the late 1980s, but these sectors remained crucial 
for the country's economic security. Although only 8 percent of 
its territory was arable, the country had been self-sufficient in basic 
foodstuffs since the 1960s — indeed, surpluses of dairy products and 
meat caused serious difficulties in the 1970s and the 1980s. Seventy- 
six percent of the country was covered by forests, which supplied 
the country's most important raw material — lumber. Agriculture 
and forestry had long been closely linked: most farms included for- 
estland, and most farmers supplemented their earnings by selling 
lumber or by working in the forest industries during the winter. 
Although rivers and l2Lkes covered about 9 percent of Finland, and 
the country had extensive coastal waters, fishing was not an im- 
portant source of food or employment. 

The Ministry of Agriculture and Forestry was responsible for 
policies dealing with agriculture, forestry, and fishing. Recogniz- 
ing the close links among these sectors, the government considered 
that policies should offer integrated solutions to the problems of 
managing the country's resources. 

Agriculture 

Finland's climate and soils make growing crops a particular 
challenge. The country lies between 60° and 70° north latitude — as 
far north as Alaska — and has severe winters and relatively short 
growing seasons that are sometimes interrupted by frosts. However, 
because the Gulf Stream and the North Atlantic Drift Current 
moderate the climate, Finland contains half of the world's arable 
land north of 60° north latitude. Although precipitation is fairly 
well distributed throughout the year, summer droughts pose occa- 
sional problems. In response to the climate, farmers have relied 
on quick-ripening and frost-resistant varieties of crops, and they 
have cultivated south-facing slopes as well as richer bottomlands 
to ensure production even in years with summer frosts. Most farm- 
land had originally been either forest or swamp, and the soil 



160 



Gathering hay on a small farm in Urjala in the province of Hdme 
Courtesy Embassy of Finland, Washington 

had usu2illy required treatment with Hme and years of cultivation 
to neutralize excess acid and to develop fertility. Irrigation was 
generally not necessary, but drainage systems were often needed 
to remove excess water. 

Until the late nineteenth century, Finland's isolation required 
that most farmers concentrate on producing grains to meet the coun- 
try's basic food needs. In the fall, farmers planted rye; in the spring, 
southern and central farmers started oats, while northern farmers 
seeded barley. Farms also grew sm2ill quantities of potatoes, other 
root crops, and legumes. Nevertheless, the totail area under culti- 
vation was still small. Cattle grazed in the summer and consumed 
hay in the winter. Essentially self-sufficient, Finland engaged in 
very limited agricultural trade. 

This traditional, almost autarkic, production pattern shifted 
sharply during the late nineteenth century, when inexpensive im- 
ported grain from Russia and the United States competed effec- 
tively with local grain. At the Scime time, rising domestic and foreign 
demand for dairy products and the availability of low-cost imported 
cattle feed made dairy and meat production much more profit- 
able. These changes in market conditions induced Finland's farmers 
to switch from growing staple grains to producing meat and dairy 
products, setting a pattern that persisted into the late 1980s. 

In response to the agricultural depression of the 1930s, the 



161 



Finland: A Country Study 

government encouraged domestic production by imposing tariffs 
on agricultural imports. This policy enjoyed some success: the total 
area under cultivation increased, and farm incomes fell less sharp- 
ly in Finland than in most other countries. Barriers to grain imports 
stimulated a return to mixed farming, and by 1938 Finland's farm- 
ers were able to meet roughly 90 percent of the domestic demand 
for grain. 

The disruptions caused by the Winter War and the Continua- 
tion War caused further food shortages, especially when Finland 
ceded territory, including about one- tenth of its farmland, to the 
Soviet Union (see The Winter War and The Continuation War, 
ch. 1). The experiences of the depression and the war years per- 
suaded the Finns to secure independent food supplies to prevent 
shortages in future conflicts. 

After the war, the first challenge was to resettle displaced farm- 
ers. Most refugee farmers were given farms that included some 
buildings and land that had already been in production, but some 
had to make do with "cold farms," that is, land not in production 
that usually had to be cleared or drained before crops could be sown. 
The government sponsored large-scale clearing and draining oper- 
ations that expanded the area suitable for farming. As a result of 
the resettlement and land-clearing programs, the area under cul- 
tivation expanded by about 450,000 hectares, reaching about 2.4 
million hectares by the early 1960s. Finland thus came to farm more 
land than ever before, an unusual development in a country that 
was simultaneously experiencing rapid industrial growth. 

During this period of expansion, farmers introduced modern 
production practices. The widespread use of modern inputs — 
chemical fertilizers and insecticides, agricultural machinery, and 
improved seed varieties — sharply improved crop yields. Yet the 
modernization process again made farm production dependent on 
supplies from abroad, this time on imports of petroleum and fer- 
tilizers. By 1984 domestic sources of energy covered only about 
20 percent of farm needs, while in 1950 domestic sources had sup- 
plied 70 percent of them. In the aftermath of the oil price increases 
of the early 1970s, farmers began to return to local energy sources 
such as firewood. The existence of many farms that were too small 
to allow efficient use of tractors also limited mechanization. Another 
weak point was the existence of many fields with open drainage 
ditches needing regular maintenance; in the mid-1980s, experts 
estimated that half of the cropland needed improved drainage works. 
At that time, about 1 million hectares had underground drainage, 
and agricultural authorities planned to help install such works on 
another million hectares. Despite these shortcomings, Finland's 



162 



The Economy 



agriculture was efficient and productive — at least when compared 
with farming in other European countries. 

Farms and Farmers 

Finland's agriculture was based on privately owned family farms. 
This was especially the case after 1922, when the republic, anx- 
ious to reduce rural discontent, implemented the first of a series 
of land reforms that redistributed land to tenants and to landless 
farm workers (see The Establishment of Finnish Democracy, 
ch. 1; Domestic Developments and Foreign Politics, 1948-66, 
ch. 1). After World War II, the government resettled some 40,000 
farm families displaced from areas occupied by the Soviet Union. 
The postwar resettlement program also transferred land to farms 
considered too small for efficient operations, many of which had 
been set up in the interwar period. 

As a result of the resettlement program, Finland was one of the 
few industrialized countries in which the number of farms increased 
after 1945; by 1950 there were about 260,000 farms. The number 
of farms started to decline in the 1960s, however, falling to about 
200,000 by 1981 . The decrease in the number of farms caused an 
increase in average farm size, but large farms still remained rare. 
Thus, in the mid-1980s, about 60 percent of farms covered less 
than ten hectares, 25 percent included between ten and twenty hec- 
tares, and only 15 percent occupied more than twenty hectares. 
At that time, both large and small farms were disappearing, leav- 
ing an increasing number of farms that were between ten and twenty 
hectares. Observers predicted that this trend was likely to continue. 

In the late 1980s, the average farm comprised twelve hectares 
of arable land and thirty-five hectares of forest. The relative propor- 
tions of field holdings to forest holdings varied from region to region; 
in the south, farmers tended to own more arable land but less forest, 
while in the north, the reverse was true. Farm families formed the 
basic production unit. Family members provided about 95 percent 
of farm labor; wage earners supplied the remainder. Most farms 
specialized in one or two activities, such as hog production, dairy 
farming, or grain cultivation. Although in the early postwar years 
most farms produced some milk, by the early 1980s only one out 
of three farms did so, and about half of all farms had no farm 
animals. This tendency toward specialization increased the effi- 
ciency of Finland's relatively small production units. 

Farm incomes lagged behind those of the total population. For 
example, according to a 1984 study, the average income of full- 
time farmers totaled only 70 percent of that of industrial workers. 
Nevertheless, income disparities between agriculture and other 



163 



Finland: A Country Study 



sectors were probably less severe than these figures indicate because 
many farm families supplemented their incomes with earnings from 
forestry and other occupations. In the mid-1980s, only 62 percent 
of farmers' incomes came from agriculture, while another 26 per- 
cent was derived from wages and 12 percent was earned from 
forestry. 

Farmers had a strong tradition of practical and political cooper- 
ation. In the late 1980s, some 90 percent of Finnish farmers 
belonged to agricultural unions, which were divided between those 
for Finnish speakers and those for Swedish speakers. More than 
330,000 union members belonged to 430 Finnish-language locals 
or to 80 Swedish-language loccJs. Founded in 1917, the Confeder- 
ation of Agricultural Producers (Maataloustuottajain Keskus- 
liitto — MTK) served as an umbrella organization for agricultural 
unions, and it represented farmers in agricultural price negotia- 
tions with the government and with other producer groups. 

In addition to joining unions that helped influence farm poUcy, 
farmers had established cooperative associations that provided farm 
supplies, shared marketing expenses, and arranged farm financ- 
ing. The umbrella organization of farm cooperatives was the 
Pellervo Society, which had more than a million members. Each 
branch of agriculture organized its own cooperatives to handle sales 
of farm products and purchases of supplies. Cooperative banks 
provided about half of aU money used to finance farming, and 
cooperative insurance associations handled farm and crop insurance. 

Agricultural Policy 

Finland's agricultural policy has long been inspired by more than 
purely economic considerations. The need to maintain secure food 
sources caused the Finns to subsidize uncompetitive grain produc- 
tion rather than to allow further specialization in dairy and meat 
operations. Social concerns drove policies designed to maintain 
family farms and to give farmers incomes and working conditions 
more equal to those of other workers. The desire to maintain set- 
tlements in the sparsely populated northern provinces led to heavy 
subsidies for farmers in those regions. Other goals included stabiliz- 
ing retail food prices and increasing farm size and efficiency. 

In the late 1980s, agricultural policy made involved trade-offs 
among these partially contradictory objectives. For national secu- 
rity reasons, the government gave priority to ensuring self- 
sufficiency in basic foodstuffs. But self-sufficiency, like other farm- 
policy goals, resulted in costly agricultural surpluses that had to 
be dumped on international markets. Structural reforms, designed 
to increase farm size, could improve efficiency, strengthen family 



164 



The Economy 



farms, and increase farm incomes, but they were difficult to 
implement. 

By the early 1960s, the first goal — self-sufficiency — had been 
achieved. By the late 1970s, however, surplus production had 
become a pressing problem. According to government estimates 
made in the early 1980s, crop productivity would increase by about 
1.5 percent per year, and productivity in animal husbandry would 
increase by about 0.5 percent per year. Because Finland's consump- 
tion of agricultural products was stagnant, crop and animal sur- 
pluses would therefore continue to grow — unless agricultural prices 
were reduced. 

In the late 1970s, the government stepped up programs designed 
to encourage farmers to shift production from products in surplus, 
such as eggs, milk, and meat, to products that replaced imports, 
such as wheat, sugar, and vegetables. Starting in the mid-1980s, 
worldwide agricultural surpluses depressed prices and made agricul- 
tural exports especially expensive. In response, the government 
redoubled its efforts to control output and to encourage reforesta- 
tion of surplus farmland. This policy had begun to maike a signifi- 
cant impact by 1987. 

Agricultural policy centered on target prices set by the Ministry 
of Agriculture and Forestry each spring and fall, after negotiations 
with the MTK. Administered under the periodic farm income acts, 
which defined general rules for setting farm prices, the negotia- 
tions included two phases. In the first phase, farmers received com- 
pensation for increases in input costs according to a formula laid 
out in the applicable Farm Income Act. In the second phase, the 
negotiations addressed how much farm labor would be paid. In 
general, farm pay settlements reflected nonagricultural wage agree- 
ments, and they were based on estimated hourly wages in agricul- 
ture (see Human Resources, this ch.). For example, in the spring 
of 1986 farmers received no compensation for input costs, which 
had been stable (largely as a result of falling world energy prices), 
but they did achieve a 6. 1 percent increase in income, much higher 
than the 2.4 percent agreed to in the 1986 framework agreement 
for other workers. Observers considered the setdement to have been 
generous, but perhaps justified, because agriculture remained a 
low- wage sector. 

Once the negotiation process had determined overall farm 
income, the Ministry of Agriculture and Forestry fixed target prices 
for individual crops. In response to overproduction problems, the 
ministry reduced prices for surplus products and required that farm- 
ers pay part of the costs of subsidizing exports. Programs to reduce 



165 



Finland: A Country Study 

surpluses by lowering target prices achieved only limited results, 
however, because increases in productivity often outweighed 
declines in target prices. The ministry established a dual-price sys- 
tem for milk and eggs, which made production beyond output quo- 
tas unprofitable, and implemented a number of voluntary 
production controls, including contracts to increase fallow land or 
to limit production of milk, beef, pork, and eggs. In the summer 
of 1987, the government prohibited clearing fields, introduced mea- 
sures to encourage reforestation, and began considering heavier 
taxes on the agricultural earnings of part-time farmers as well as 
increased pensions for farmers who agreed to retire early. 

Subsidies for agricultural consumption were partially effective 
in increasing demand for surplus products. Health concerns, 
however, apparently limited consumers' willingness to eat more 
dairy and meat products. Surplus-reduction measures were hav- 
ing some effect by the late 1980s, but in 1987 farm surpluses re- 
mained a serious problem. 

Structural reforms also received considerable attention. To slow 
the growth of large, "industrial" farms, the government required 
licenses for farms that exceeded certain production levels, hoping 
that limiting the size of farms would both reduce surpluses and help 
maintain family farms. The Agricultural Development Fund pro- 
vided low-interest loans and subsidies for investments in farm 
infrastructure; most of the loans from this fund went to farmers 
in northern Finland. Small farmers who wanted to enlarge their 
farms could also receive low-interest credits. In an effort to keep 
new farmers from falling into debt, the government also allowed 
farmers under the age of thirty-five to apply for state grants when 
they established a farm. Moreover, the state tried to make farm- 
ing more attractive to young people by providing outside helpers 
to take over farm operations temporarily. This arrangement facili- 
tated maternity leaves and even annual vacations. 

Farmer training programs, crop research, and extension ser- 
vices helped farmers to improve agricultural practices. Local schools 
provided agricultural training for youths who could later attend 
specialized schools; university students could major in agriculture. 
The Ministry of Agriculture and Forestry and the universities 
undertook research projects that emphasized the development of 
frost-resistant crop varieties. The ministry also administered 
extension services that gave technical advice and communicated 
research findings to farmers. These training and research programs 
deserved much of the credit for the progress that farmers had 
achieved during the postwar period. 



166 



The Economy 



Farm Production Patterns 

During most of the twentieth century, Finnish farmers have 
favored raising animals over growing plants for human consump- 
tion. These preferences resulted in part from the country's cUmate 
and soils, which were more suitable for the production of feed for 
animsds than for the production of crops for human consumption. 
The small size of many farms also encouraged the emphasis on 
milk, eggs, and meat; only on a large farm could a family earn 
sufficient income from less labor-intensive field crops. Thus, in the 
late 1980s, about 40 percent of farm income came from milk; 30 
percent, from meat; 9 percent, from grain; 5 percent, from eggs; 
and 16 percent, from other products (see table 16, Appendix A). 

Regional ecological variations influenced the distribution of 
agricultural production (see fig. 16). In the southern and western 
parts of the country, where the climate is more favorable and soils 
are richer, farmers generally produced grain, poultry, and pigs, 
while in the north and the east they specialized in hardier root crops 
and in dairying. It was in the north, too, that the country's 200,000 
reindeer, one-third of which were owned by Lapps, were raised. 

In the late 1980s, cattle operations remained the mainstay of 
farming, but Finland's farmers also raised pigs, poultry, and other 
animals. Most pigs were raised on relatively large, specialized farms. 
Poultry production increased after the mid-1960s to accommodate 
an increased demand for meat. A more recent development, a 
response to the oversupply of traditional animal products, was a 
shift to fur farming. By the mid-1980s, about 6,000 farms, espe- 
cially those in Vaasa Province along the coast of the Gulf of Both- 
nia, were producing a substantial share of the world's mink and 
fox furs (see fig.l). The Finns exported most furs, but some were 
used domestically in luxury clothing. 

About 85 percent of Finland's arable land supplied feed for farm 
animals. Farmers dedicated more than 30 percent of their land to 
hay, silage crops, and pasture (see table 17, Appendix A). Grains, 
the most important field crop, took up slightly more than half the 
country's arable land. The most widely planted grain crops — barley 
and oats — were used primarily to feed livestock. Rutabagas and 
mangels, particularly hardy root crops, also served as animal feed. 

Despite the emphasis on producing feed for livestock, the Finns 
made substantial efforts to ensure supplies of basic human food- 
stuffs. By the 1980s, the annual wheat and rye crops, used for milk- 
ing bread, met domestic demand in years with normal harvests. 
Potatoes produced high yields even in the north, and the potato 
crop was usually large enough for domestic needs. Domestic 



167 



Finland: A Country Study 



\ 1 Arable land 
I I Forested land 
— Northern boundary of forest 
I i Wasteland 
Barley 
Oats 
Wheat 
Sugar beets 



Arctic Circle 



Northern boundary of fruit 
cultivation 



. _ Northern boundary of winter rye 

— Northern boundary of sugar beets 

Southern boundary of pasture for 

reindeer 



A 



Alar)d Islands 




HELSINKI 



Source: Based on information from Federal Republic of Germany, Statistisches, Bundeszimt, 
Ldnderberricht Finnland 1986, Wiesbaden, 1986, 9 



Figure 16. Agriculture and Forestry, 1985 



168 



The Economy 



sugar beets provided about half of the sugar consumed in the coun- 
try. Some farmers, especially those with small holdings near large 
cities, specialized in growing vegetables; they managed to raise as 
much as 80 percent of the vegetables consumed in Finland. 

Forestry 

Forests played a key role in the country's economy, making it 
one of the world's leading wood producers and providing raw 
materials at competitive prices for the crucial wood-processing 
industries. As in agriculture, the government had long played a 
leading role in forestry, regulating tree cutting, sponsoring tech- 
nical improvements, and establishing long-term plans to ensure 
that the country's forests would continue to supply the wood- 
processing industries. 

Finland's wet climate and rocky soils are ideal for forests. Tree 
stands do well throughout the country, except in some areas north 
of the Arctic Circle. In 1980 the forested area totaled about 19.8 
million hectares, providing 4 hectares of forest per capita — far above 
the European average of about 0.5 hectares. The proportion of forest 
land varied considerably from region to region. In the central lake 
plateau and in the eastern and northern provinces, forests covered 
up to 80 percent of the land area, but in areas with better condi- 
tions for agriculture, especially in the southwest, forests accounted 
for only 50 to 60 percent of the territory. The main commercial 
tree species — pine, spruce, and birch — supplied raw material to 
the sawmill, pulp, and paper industries. The forests also produced 
sizable aspen and elder crops. 

The heavy winter snows and the network of waterways were used 
to move logs to the mills (see fig. 8). Loggers were able to drag 
cut trees over the winter snow to the roads or water bodies. In the 
southwest, the sledding season lasted about 100 days per year; the 
season was even longer to the north and the east. The country's 
network of lakes and rivers facilitated log floating, a cheap and rapid 
means of transport. Each spring, crews floated the logs downstream 
to collection points; tugs towed log bundles down rivers and across 
lakes to processing centers. The waterway system covered much 
of the country, and by the 1980s Finland had extended roadways 
and railroads to areas not served by waterways, effectively open- 
ing up all of the country's forest reserves to commercial use. 

Forestry and farming were closely linked. During the twentieth 
century, government land redistribution programs had made forest 
ownership widespread, allotting forestland to most farms (see 
Agriculture, this ch.; The Establishment of Finnish Democracy, 
ch. 1; Domestic Developments and Foreign Politics, 1948-66, 



169 



Finland: A Country Study 

ch. 1). In the 1980s, private farmers controlled 35 percent of the 
country's forests; other persons held 27 percent; the government, 
24 percent; private corporations, 9 percent; and municipalities and 
other public bodies, 5 percent. The forestlands owned by farmers 
and by other people — some 350,000 plots — were the best, producing 
75 to 80 percent of the wood consumed by industry; the state owned 
much of the poorer land, especially that in the north. 

The ties between forestry and farming were mutually beneficial. 
Farmers supplemented their incomes with earnings from selling 
their wood, caring for forests, or logging; forestry made many other- 
wise marginal farms viable. At the same time, farming communi- 
ties maintained roads and other infrastructure in rural areas, and 
they provided workers for forest operations. Indeed, without the 
farming communities in sparsely populated areas, it would have 
been much more difficult to continue intensive logging operations 
and reforestation in many prime forest areas. 

Finland's government monitored and influenced all aspects of 
forestry. The Ministry of Agriculture and Forestry was responsi- 
ble for preparing and implementing forestry legislation. Subordinate 
to the ministry, the National Board of Forestry supervised private 
forests and managed state-owned forests. The national board also 
maintained liaison with the two central forestry boards, which in 
turn controlled a total of nineteen district forestry boards. The cen- 
tral and the district boards were self-governing bodies comprising 
representatives of the forest owners, wood-processing industries, 
and forestry workers. The boards supervised forest operations, often 
working in cooperation with the local forest management associa- 
tions, which were entirely controlled and financed by forest owners. 

The ministry carried out forest inventories and drew up silvicul- 
tural plans. According to surveys, between 1945 and the late 1970s 
foresters had cut trees faster than the forests could regenerate them. 
Nevertheless, between the early 1950s and 1981 , Finland was able 
to boost the total area of its forests by some 2.7 million hectares 
and to increase forest stands under 40 years of age by some 3.2 
million hectares. Beginning in 1965, the country instituted plans 
that called for expanding forest cultivation, draining peatland and 
waterlogged areas, and replacing slow- growing trees with faster- 
growing varieties. By the mid-1980s, the Finns had drained 5.5 
million hectares, fertilized 2.8 million hectares, and cultivated 3.6 
million hectares. Thinning increased the share of trees that would 
produce suitable lumber, while improved tree varieties increased 
productivity by as much as 30 percent. 

Comprehensive silvicultural programs had made it possible for 
the Finns simultaneously to increase forest output and to add to 



170 



Transporting logs from 

forest to factory ^ 
Courtesy Embassy of Finland, 
Washington 




the amount and value of the growing stock. By the mid-1980s, Fin- 
land's forests produced nearly 70 million cubic meters of new wood 
each year, considerably more than was being cut. During the post- 
war period, the annual cut increased by about 120 percent to about 
50 million cubic meters. Wood burning fell to one-fifth the level 
of the immediate postwar years, freeing up wood supplies for the 
wood-processing industries, which consumed between 40 million 
and 45 million cubic meters per year. Indeed, industry demand 
was so great that Finland needed to import 5 million to 6 million 
cubic meters of wood each year. 

To maintain the country's comparative advantage in forest 
products, Finnish authorities moved to raise lumber output toward 
the country's ecological limits. In 1984 the government published 
the Forest 2000 plan, drawn up by the Ministry of Agriculture and 
Forestry. The plan aimed at increasing forest harvests by about 
3 percent per year, while conserving foresdand for recreation and 
other uses. It also called for enlarging the average size of private 
forest holdings, increasing the area used for forests, and extend- 
ing forest cultivation and thinning. If successful, the plan would 
make it possible to raise wood deliveries by roughly one-third by 
the end of the twentieth century. Finnish officials believed that such 
growth was necessary if Finland was to maintain its share in world 
markets for wood and paper products (see Wood-Processing 
Industries, this ch.). 



171 



Finland: A Country Study 
Fisheries 

Unlike other Nordic countries, in the late 1980s Finland had few 
fishermen, and the fishing industry was small. Finland's coastal 
waters offered poor fishing grounds because of their low salt con- 
tent (caused by the heavy flow from the country's many rivers). 
Rivers and lakes were often relatively unproductive because stream 
runoff often contained insufficient nutrients. In addition, those in- 
land waterways that did support exploitable fish populations were 
often located too far from market centers to make commercial fishing 
profitable. Log-floating operations and hydroelectric installations 
disrupted some fishing grounds, and the paper industry polluted 
others. 

The poverty of Finland's waters explained why, despite consider- 
able government aid, relatively few Finns were fishermen. In 1985, 
for example, only 2,200 fishermen worked full-time, while another 
5,000 worked part-time; they used a fleet of about 530 boats. That 
same year, the fish catch totaled some 111 ,000 tons, of which rough- 
ly two- thirds were salt-water fish, and one-third were fresh-water 
fish. Baltic herring was the most valuable catch, followed by salmon. 
A share of the catch came from Soviet and Swedish waters, to which 
Finland had gained access under bilateral agreements. 

Unable to meet domestic demand, Finland had to import about 
300,000 tons of fish each year, including large amounts of fish offal 
that was used as feed on fur farms. Demand for fish was thus rela- 
tively strong, but observers believed that, given the country's poor 
fisheries, it was likely that the small fishing industry would become 
even smaller. 

Energy and Mineral Resources 

Finland lacked petroleum, gas, and co2il reserves, but it had sig- 
nificant mineral deposits. As in many industrisd countries, low- 
cost imported petroleum fueled economic growth from the end of 
World War II until the 1973 oil crisis. Finland's forest industries, 
which were heavy energy users, had developed in the context of 
low energy prices. Even the achievement of agricultural self- 
sufficiency owed much to energy imports, in the form of either fuel 
for tractors or chemical fertilizers. From the 1970s, Finland's econ- 
omy had to adjust to high energy costs. Finnish policy makers there- 
fore had to ensure that the country used its other resources, 
including its mineral deposits, as efficientiy as possible. 

Energy 

Even before the 1973 oil crisis, energy was a major concern, and 



172 



Pyhdkoski hydroelectric power plant, one of the largest of its kind 
in Finland, located about twenty-five kilometers east of Oulu 
Courtesy Embassy of Finland, Washington 

Finland had started energy- saving programs meant to cut depen- 
dence on imports and to maintain export competitiveness. 
Nevertheless, the country had one of the world's highest per capi- 
ta rates of energy consumption. The cold climate required that the 
Finns expend about a quarter of their energy supply for space heat- 
ing, while the relatively long distances separating Finland's settle- 
ments required heavy fuel use for transportation. The importance 
of energy-intensive processing industries, including not only the 
lumber, pulp, and paper sectors but also the minerals and basic 
metcds sectors, further expanded the country's energy needs. In 
the late 1980s, Finland consumed about 30 million tons of oil 
equivalent per year, distributed among solid fuels (15 percent), 
liquid fuels (40 percent), and electricity (45 percent), which put 
annu2il per capita consumption at 0.6 tons of oil equivalent — about 
50 percent higher than per capita consumption in the United States. 

Domestic sources could cover only about 30 percent of total ener- 
gy demand, and imported energy supplied the remainder. In 1986 
the government estimated that, even assuming continued efforts 
at conservation, energy demand would grow by at least 1 percent 
per year during the 1990s and that demand for electricity would 
grow even faster. By the late 1980s, policy makers faced impor- 
tant choices in their efforts to maintain secure supplies of electricity 



173 



Finland: A Country Study 

and other forms of energy. Four major goals governed policy 
decisions: increasing the use of domestic energy sources, provid- 
ing for possible import shortages, expanding electricity production, 
and improving conservation programs. 

The state played a strong role in energy management. The 
government used state-owned energy enterprises and price con- 
trols to influence both production and consumption. The state 
owned the most important energy supply enterprises, including 
Imatran Voima, the largest electricity producer, which managed 
the national electricity distribution grid; Kemijoki, a hydropower 
concern; Neste, which controlled the import, refining, and distri- 
bution of petroleum and natural gas; and Vapo, a producer and 
distributor of peat and other domestic fuels. Another major policy 
tool was the control of energy prices, either directly or by means 
of taxes and tariffs. 

Finland's main domestic energy sources were hydroelectric 
power, peat, and wood. By the late 1980s, the country's large 
hydroelectric potential had been thoroughly tapped, except possi- 
bly for the rivers protected by environmental legislation. Neverthe- 
less, hydroelectric production could still be increased by renovating 
existing installations and by building additional plants at secon- 
dary sites. Encouraged by investment subsidies and by the results 
of state-funded research, Finland had begun systematic exploita- 
tion of its peat reserves. Peatlands covered more than one-third 
of Finland's surface area, but in the mid-1980s only about 5 per- 
cent of this area was being used. The government hoped to more 
than double peat output by the year 2000. Wood was widely used 
for heating in rural areas, especially after the oil price increases 
of the 1970s; it was even more important for the forest industries, 
which used waste wood to supply about 60 percent of their energy 
needs. 

Despite increased use of domestic energy sources, the economy 
depended on imports of petroleum, coal, natural gas, uranium, 
and electricity. Observers expected that this dependence would get 
worse in the 1990s and beyond as consumption increased. More- 
over, the fall in world petroleum prices, starting in the early and 
mid-1980s, had made oil imports more competitive and thus might 
delay investments in domestic energy sources. 

The Soviet Union was traditionally Finland's main energy sup- 
plier, providing petroleum, natural gas, electricity, uranium, and 
even nuclear fuel reprocessing services. Energy products played 
an important role in Finnish-Soviet trade, accounting for about 
80 percent of Soviet exports to Finland. The decline in world 
petroleum prices in the 1980s meant that Finland had to increase 



174 



The Economy 



the volume of petroleum imports from the Soviet Union in order 
to maintain the level of sales to the Soviet market. To respond to 
the resulting oversupply of crude petroleum, Neste began refining 
oil for export (see Regional Economic Integration, this ch.). Fin- 
land's imports of Soviet natural gas transited a pipeline to the 
southeastern part of the country, with branches leading to the Hel- 
sinki and the Tampere areas. In the late 1980s, Finland partici- 
pated in discussions regarding the construction of a Nordic gas 
pipeline network that was designed primarily to transport Soviet 
gas to other Nordic countries but that might also carry Norwegian 
gas to Finland. 

The Finns reduced their dependence on Soviet energy by 
patronizing other suppliers. For example, during the late 1980s, 
the Finns began importing cocd not only from Poland and the Soviet 
Union but also from the United States, Colombia, and Australia. 
Coal imports had declined in the late 1970s as a result of rapid 
increases in the generation of electricity from nuclear plants, but 
they rose again by the mid-1980s to some 5 million tons per year. 
Finland also purchased electricity from Sweden, and the Finns were 
interested in finding other sources for electricity imports. 

To reduce further their vulnerability to cutoffs of foreign energy 
supplies, the Finns also undertook an energy stockpiling program. 
Informed observers believed that the country maintained stocks 
sufficient to supply it for six months, which compared favorably 
with stockpiles held by other industrial countries. 

Experts predicted that Finland would face an electricity short- 
age by the mid-1990s, unless additional generating capacity came 
into operation by then. Electricity consumption had grown faster 
than energy use as a whole during the 1980s, largely because more 
and more households had switched to electric heating. In the late 
1980s, most observers expected that demand would rise by 2 to 
3 percent per year until the year 2000. Finland's growing needs 
for electric power spurred attempts to increase domestic generat- 
ing capacity, which in early 1986 had reached 10,700 megawatts. 
In the late 1980s, hydroelectric plants supplied approximately 30 
percent of total electric power. Finland produced about 41 percent 
of its electricity at four nuclear power plants built between 1977 
and 1980: two Swedish-made, 660-megawatt, boiling-water reac- 
tors on the island of Olkiluoto; and two Soviet-made, 440-megawatt, 
pressurized-water reactors at Loviisa. Conventional thermal plants 
accounted for another 22 percent of electricity production, and 
imports from neighbors covered the remaining 6 percent. 

In early 1986, the Ministry of Trade and Industry prepared a 
plan for the 1990s that called for increasing installed electrical 



175 



Finland: A Country Study 

capacity by about 2,700 megawatts by the year 2000. About 1,200 
megawatts of the new capacity was to come from small plants scat- 
tered around the country. Another 1,500 megawatts would have 
to come from large plants — peat-fired, coal-fired, and nuclear. 
According to the plan, Finland could either import another 500 
megawatts from the Soviet Union or further expand nuclear 
capacity. 

In the spring of 1986, the Eduskunta almost approved the plan, 
including the construction of a fifth nuclear plant. Public reaction 
to the nuclear disaster at Chernobyl in the Soviet Union froze con- 
sideration of nuclear power, however, and induced a complete 
review of energy policy. Public pressure caused the government 
to replace the proposed plant with coal-fired plants. Despite this 
setback to the nuclear industry, informed observers believed it prob- 
able that Finland would increase its nuclear capacity in the 1990s, 
once public opposition had died down. 

Since the 1970s, the government has made considerable efforts 
to spur energy conservation. Domestic energy prices have been 
maintained at realistic levels — gasoline prices were among the 
highest in all European countries — encouraging the public to con- 
serve. The government raised energy efficiency standards for home 
construction and renovation, cutting energy use for heating by 30 
to 40 percent over a decade. Finland pioneered the development 
of district heating, which used otherwise-wasted energy from power 
plants. Observers predicted that this efficient source of domestic 
heat would supply half the country's homes by the year 2000. 
Environmentalists believed that further energy savings could be 
achieved that would reduce the need for building more power plants, 
but mainstream opinion supported continued increases in energy 
production to support economic growth. Yet no matter how much 
Finland conserved, the country would still need to import large 
amounts of energy and would face difficult trade-offs between the 
benefits and the risks and costs of various energy options. 

Minerals 

Finland contained only limited mineral deposits, and it coninued 
to be only a modest producer of minerals. The country's most im- 
portant deposits were located at Outokumpu in eastern Finland 
(see fig. 17). Discovered in 1910, the Outokumpu area contained 
commercially exploitable deposits of copper, iron, sulfur, zinc, 
cobalt, nickel, gold, and silver. In 1953 prospectors discovered a 
major source of iron ore at Otanmaki in centrEil Finland. Other 
sites yielded nonmetallic minerals, including pyrites and apatite 
(a low-grade phosphoric ore used for fertilizer production), and 



176 



Nuclear power plant at Loviisa (Louisa) on the southern coast, 
about seventy-five kilometers east of Helsinki 
Courtesy Embassy of Finland, Washington 

stone for building. The mineral industry employed more than 
60,000 people, but only 500 of them were in mining and quarry- 
ing; the others worked in mineral processing. 

The government intervened directly in the minercd sector. Un- 
der Finnish law, the Ministry of Trade and Industry controlled 
prospecting and mining rights. The ministry's Geological Survey 
dominated prospecting, and it had made most major miner2J dis- 
coveries. The ministry controlled most production through joint- 
stock companies, in which the state owned most or all of the shares, 
but in which the management ran the companies much like pri- 
vate firms. The industry comprised two large, state-controlled com- 
panies, the Outokumpu Group and Rautaruukki, and a number 
of sm2iller, generally private companies. The Outokumpu Group, 
by far the largest producer, operated the Outokumpu mines, as 
well as others producing cadmium, chromite, ferrochrome, mer- 
cury, pyrite, and zinc. The company also invested in foreign mines 
and produced mining equipment. Rautaruukki controlled the Otan- 
maki iron mine, other mines producing cobsJt, quartz, and vanadi- 
um, and Finland's largest steel plant. 

By the mid-1980s, Finland had exploited most of its limited 
mineral deposits and had to work hard to supply its processing 
industries. The Geological Survey had undertaken an extensive 



177 



Finland: A Country Study 

exploration program to find new resources. Finnish firms had pur- 
chased interests in mineral operations in other Scandinavian coun- 
tries, and they had participated in joint ventures with Soviet 
enterprises to exploit the rich mineral deposits on the Kola Penin- 
sula. The leading companies had also developed vertically integrated 
structures, investing in all stages of metal production from the de- 
sign and production of mining equipment to metal processing. The 
Outokumpu Group, for example, was one of the few firms in the 
world that controlled all aspects of the production of stainless steel. 
Industry leaders hoped that, as mining output fell during the later 
years of the twentieth century, overseas investments and vertical 
integration would make it possible to maintain employment despite 
the exhaustion of domestic mineral resources. 

Industry 

Although industrial development began later in Finland than it 
did in many other European countries, by the 1950s manufactur- 
ing and processing had replaced agriculture and forestry as the lead- 
ing sectors of the economy. By the late 1970s, the service sector 
had surpassed industry in total production and employment, but 
industry remained the main export earner, allowing the country 
to pay for needed imports of energy and raw materials. Labor ef- 
ficiency was greater in industry than it was in the economy as a 
whole — the one-third of the work force employed in industry 
produced about 40 percent of GDP — and it continued to grow at 
a higher rate here than it did in other sectors. In turn, industrial 
wages tended to be higher and to rise faster than the national aver- 
age, making industricd jobs attractive. Thus, although some 
observers categorized Finland as a postindustrial society, the Finns 
strove to maintain industrial competitiveness, which they saw as 
the foundation for their high standard of living. By the early 1980s, 
however, as a result of the oil crises of the 1970s and the increased 
competition in world markets for manufactured goods, Finnish 
industry faced serious challenges. Many observers argued that to 
maintain industrial exports, the Finns would have to shift from 
heavy industry to high- technology products. 

The geographical distribution of industry had been strongly 
influenced by the relative shortage of raw materials (other than lum- 
ber) and by the small size of the domestic market. The wood- 
processing industries had grown up on rivers near the coast of the 
Gulf of Bothnia and the Gulf of Finland, in locations that offered 
sources of both lumber and hydroelectric power as well as access 
to foreign markets. As many raw materials were imported and most 
industrial production was exported, other industries had grown 



178 



The Economy 



up in the four southern provinces, especially near Finland's main 
harbors along the southern coast. Although the government had 
implemented policies that favored development in the north dur- 
ing the postwar period, in the late 1980s more than 70 percent of 
industrial jobs were still located in the south. In the long run, the 
development of high-technology industries, less dependent on trans- 
portation and energy supplies, might facilitate efforts to decentralize 
industry, but such development would be gradual. 

Once dominated by the forest industries, Finnish industry 
underwent rapid structural change after World War II. A boom 
in metalworking began in the immediate postwar years in response 
to the need to ship capital goods, including machine tools, ships, 
rolling stock, and chemicals, to the Soviet Union (see The Effects 
of the War, ch. 1). By the mid-1950s, heavy industry had taken 
over the leading role traditionally held by wood products. Begin- 
ning in 1957, Finland began to liberalize its trade policies, forcing 
domestic industry to compete in world markets and bringing new 
industries to the fore, especially metalworking and engineering, 
but also petroleum refining, chemicals, plastics, and high- technology 
goods (see table 18, Appendix A). 

Guided by domestic and foreign tastes and by fierce international 
competition, industrial firms had developed a wide range of products 
and had maintained quality standards that were often higher than 
those typical of industry in the United States. Aware of the rela- 
tively small size of their industry, industrial leaders and govern- 
ment officials aimed successfully for technological leadership in 
narrowly defined subsectors in which Finland enjoyed compara- 
tive advantages. Since the 1950s, Finnish firms have been able to 
dominate world markets for products such as icebreakers, wood- 
processing and paper-processing machinery, and environmental 
protection equipment. Buyers of such products were often less sen- 
sitive to price increases than they were to technical innovations, 
quality, and durability. At the same time, Finland had avoided 
some of the structural weaknesses, such as excessive investments 
in declining product lines, that plagued the other Nordic economies. 

Finland's industrial structure traditionally was polarized between 
large and small firms. In the early 1980s, the vast majority of Fin- 
land's 15,000 industrial firms each employed fewer than 100 peo- 
ple. These small firms accounted for only about one-fifth of the 
industrial work force and for slightly more than one-fifth of the 
value of industrial output. The approximately 130 firms that 
employed more than 500 people apiece commanded about 60 per- 
cent of the labor force and produced about two-thirds of indus- 
trial output. During the mid-1980s and the late 1980s, a wave of 



179 



Finland: A Country Study 





(Au) 


Gold 


(c?) 


Chrome 


(§) 


Copper 


(g) 


Iron 


® 


Nickel 




Pyrites 


© 


Vanadium 


@ 


Zinc 


C 


Chemical 
industry 


H 


Wood-working 

in/Hi ictr\/ 
II lUUoll y 


p 


Paper industry 


L 


Iron and steel 
industry 


M 


Metal-working 
industry 




Shipbuilding 


tl 


Petroleum 
refinery 



Vaasa 




kland Islands ^f^^ M (Zn)(Cu 



Hanko 



Source: Based on information from Federal Republic of Germany, Statistisches Bundesamt, 
Ldnderbericht Finnland, 1986, Wiesbaden, 1986, 9. 



Figure 17. Minerals and Industries, 1985 



180 



The Economy 



mergers further reduced the market share of small firms. Although 
industry was thus quite concentrated, the flexibility and innovative- 
ness of small firms had often proven cruciad, and observers believed 
that small firms would continue to serve important entrepreneuri- 
al functions. 

Despite many notable successes, industry faced new difficul- 
ties in the 1970s and the 1980s, in addition to increases in world 
energy prices. By the late 1970s, industrial firms faced tougher 
foreign competition and had to scramble to maintain their shares 
of export markets. To ensure competitiveness, industry needed to 
renovate existing plants and to increase sharply investments in 
high-technology product lines that could supplement traditional 
specialties. 

Industrial capital formation was a major priority. Although Fin- 
land's relatively recent industrial development meant that many 
industrial facilities were still relatively new and efficient, the drive 
to develop high-technology production required massive invest- 
ments. Industrial firms carried a debt load that averaged about 
80 percent of total assets, making further investment difficult. In 
the late 1980s, however, a number of developments promised to 
improve industrial financing. Helsinki's financial markets were 
becoming more innovative, and informed observers expected that 
the state would cut taxes on corporate profits, would eliminate taxes 
on industricd energy consumption, and would increase tax credits 
offered for research and development expenditures (see Bank- 
ing and Finance, this ch.). Despite these positive developments, 
however, industry needed to attract more resources from abroad 
if it were to remain competitive in world markets. 

Finland's industry had long depended on world markets, but 
until the 1980s direct foreign investment in Finland had played 
only a minor role. The country hosted significantly fewer foreign 
firms than its Nordic neighbors, partly as a result of limitations 
on foreign ownership of Finnish assets. Such regulations had been 
relaxed after 1980, but foreign firms still controlled only about 5 
percent of industrial capacity. Finnish firms likewise began to in- 
vest abroad in the 1970s. Thus, whereas in 1970 only 5 Finnish 
firms had invested in the United States, by 1987 about 250 had 
done so. By the late 1980s, internationalization had begun to sup- 
plant the traditional strategy of specialization, as more and more 
firms entered joint ventures with foreign partners and built plants 
in countries to which they exported. The trend toward internation- 
alization offered the prospect that Finland would be able to attract 
additional capital and up-to-date technologies. 



181 



Finland: A Country Study 

Industrial Policy 

The state had played an important role in Finland's industrial 
development, but it did not intervene directly so much as many 
other European governments. Intervention in industry began in 
the mid-nineteenth century, and it increased over time. Tariff policy 
and government procurement, the latter being especially impor- 
tant during the two world wars, furthered the development of 
manufacturing. The government's influence was probably most 
important in the years after 1944, when Finlgmd struggled to make 
reparations payments to the Soviet Union. Partially as a legacy 
of this period, the state controlled companies that owned about 15 
percent of manufacturing capacity, employed about 14 percent of 
the work force, and contributed about 25 percent of industrial value 
added. The state was especially active in sectors requiring heavy 
investments, such as basic metals and shipbuilding. These state- 
owned firms, however, did not receive government subsidies; if 
unprofitable, they failed. Thus, while the state controlled most prices 
and implemented long-term sectoral plans in agriculture, forestry, 
energy, and minerals, state-owned firms in manufacturing remained 
largely free to manage their own affairs. 

In the late 1980s, Finnish industrial policy continued to be consi- 
derably less interventionist than the policies of most West European 
countries. The government's strategy for industries that were having 
difficulty favored rationalization and restructuring instead of sub- 
sidies. Industry was encouraged to step up investments to increase 
productivity and to arrange mergers with domestic and foreign 
interests to increase efficiency. Policy makers argued that indus- 
try, as a small sector (compared with that of many other countries) 
open to private investment but dependent on exports, must adjust 
to international conditions. 

Despite this hands-off approach, the government did subsidize 
the research and development of new industrial technologies. 
Research and development expenditures had remained low until the 
1980s, reaching only slightly more than 1 percent of GNP in 1980. 
After that time, however, the government increased such spending, 
which exceeded 2 percent of GNP by the late 1980s. The State Tech- 
nical Resecirch Institute in Otaniemi, founded in 1942, played an 
important role in providing industry with up-to-date information 
on new technologies; its maritime engineering laboratory was one 
of the largest and best equipped in the world. In 1984 the Ministry 
of Trade and Industry initiated a four-year program of research on 
target technologies, including applications of laser technology to ma- 
chine engineering, advanced measurement techniques, and offshore 



182 



Pulp mill and paper factory at Mdnttd in the province of Hdme 
Courtesy Embassy of Finland, Washington 

construction techniques for arctic conditions. The government also 
sponsored technology parks, such as the one at Oulu, that provid- 
ed facilities for cooperative research projects involving industry and 
local universities. In addition, investments in technical training 
promised a continuing supply of workers able to maintain the qual- 
ity, durability, and dependability of Finnish industrial goods. 

Wood-Processing Industries 

Wood processing has long been the mainstay of the Finnish econ- 
omy. Facilitated by extensive timber supplies, convenient trans- 
portation, and abundant water power, lumbering and papermaking 
developed rapidly after 1860 to meet growing European demand 
for paper products and lumber. Production and export patterns 
established before 1900 lasted until the second half of the twen- 
tieth century; in the 1950s, wood and paper products accounted 
for some 80 percent of total exports. By the 1980s, however, 
although the sector had continued to expand in absolute terms, 
its share of exports had fallen to about 40 percent as a result of 
the rapid growth of the metalworking sector, which had surpassed 
woodworking in both value added and employment in 1969. 

Despite this relative decline, forest products were still the coun- 
try's most important earner of foreign exchange in the late 1980s. 



183 



Finland: A Country Study 



Roughly four-fifths of wood and paper production was sold abroad, 
while most raw materials — including energy — were produced at 
home; and, although the sector contributed only about one-fifth 
of industrial value added, it still accounted for about one-quarter 
of industrial employment. 

Analysts conventionally divided the woodworking industries into 
two branches, mechanical and chemical, depending on the primary 
means of processing in each branch. The mechanical branch com- 
prised milling, manufacturing of plywood and particle board, and 
fabrication of furniture and building components. In 1986 the 
branch included some 200 large sawmills that produced most exports 
and some 6,000 small mills that met local needs. Products of the 
chemical branch included pulp and paper, cardboard, and pack- 
aging matericds. In 1986 the chemical branch encompassed twenty- 
four pulp mills, thirty paper plants, and sixteen cardboard facto- 
ries. The division between the two branches was somewhat artifi- 
cial, however, as many leading firms operated integrated plants 
in which sawdust, waste wood, and chemical byproducts of mechan- 
ical processes served as raw materials for such chemical products 
as pulp and turpentine. Industrial waste also supplied a large share 
of the industry's needed energy, making the chemical branch self- 
sufficient and reducing the energy demands of the mechanical 
branch. 

Finnish manufacturers had long been leaders in developing new 
wood-processing technologies. Several firms had developed their 
own shops for machine building, and their highly efficient paper- 
making equipment had captured an important share of world 
markets. 

In the 1980s, Finland's wood industries experienced increasing 
difficulties in exporting, largely as a result of rising input costs. 
Wages and stumpage (value of standing timber) rates were tradi- 
tionally higher in Finland than they were in many competitor coun- 
tries. Moreover, by the early 1990s analysts believed that the 
mechanical branch, which consumed about one-third of Finland's 
electricity, might face an energy shortage because of the 1986 
decision not to build a fifth nuclear plant (see Energy, this ch.). 
In response, firms modernized their plants and shifted to higher- 
value-added products. 

In the mid-1980s, interfirm cooperation and a wave of mergers 
resulted in concentration of production at a smaller number of 
centers, and observers expected that industry restructuring would 
continue into the 1990s. An increasing tendency to build plants 
overseas, which improved access to Finland's main markets, com- 
plemented the merger drive. The government had stepped in with 



184 



The Economy 



the Forest 2000 program and with a system of tax incentives for 
logging, both of which were designed to allow wood harvests to 
increase by about 3 percent per year until the end of the century 
(see Forestry, this ch,). By 1986, moreover, representatives for 
workers and landowners, apparently recognizing some of the 
difficulties faced by the industry, had negotiated decreases in both 
wages and stumpage prices. 

Metal Industries 

The metal industries led Finland's postwar economic develop- 
ment, and they were crucial to the country's economic health. Until 
World War II, Finland generally produced relatively unsophisti- 
cated goods for domestic consumption. The country's shortages 
of energy, basic metals, and capital accounted for the sector's slow 
development. Although Finland had produced ships and other cap- 
ital goods for the Russian market since the late nineteenth century, 
the real breakthrough came after 1944. Then the metalworking in- 
dustry, goaded by Soviet reparations demands, overcame its han- 
dicaps, sharply increasing both the the quantity and quality of 
output. Reparations deliveries ended in 1952, but the Soviet Un- 
ion continued to absorb Finnish metal goods. By the late 1950s, 
Finland had built an efficient and innovative metEil working sector. 

In the 1960s, the metalworking sector, stimulated by the effects 
of trade liberalization, embarked on an export drive in Western 
markets. Domestic demand rose as a result of both the expansion 
of the forest and the chemical industries and major infrastructure 
projects. Throughout the 1960s and the 1970s, the sector prospered, 
growing at an average annual rate of over 6 percent, higher than 
the rates of other industrizd sectors. The strategy of specializing 
in a small number of products in which the country already pos- 
sessed a comparative advantage paid off in export markets. Fin- 
nish design, which integrated ergonomics, durability, and attractive 
appearance, also helped maintain sales. Thus, the sector was rela- 
tively well prepared to respond in the 1970s, when rapid increases 
in energy prices, competition from newly industrialized countries, 
and worldwide improvements in capital-goods technologies threat- 
ened profitability. 

Beginning in the mid-1970s, metalworking, like the forest in- 
dustries, underwent a period of intense rationalization and 
restructuring — with only limited state help. By the late 1980s, it 
appeared that the sector was well on the way to transforming itself 
to meet the conditions of high energy costs. Indeed, metalworking 
grew faster in Finland than it did in most industrialized countries, 
and it remained Finland's leading industrial sector. 



185 



Finland: A Country Study 

Finnish analysts divided the sector into four branches: basic 
metals, machine building, trsinsport equipment, and electrical 
equipment. Although many companies were active in more than 
one branch, the categories provide a useful framework for review- 
ing industrial developments. 

Basic Metals 

Domestic ore could not meet industrial demand, but the effi- 
cient metal-processing branch, which had developed some of the 
world's most advanced technologies, provided a firm foundation 
for the production of more advanced goods (see Minerals, this ch.). 
State-owned firms (and firms in which the state owned a majority 
interest) led the development of metcils production. The 
Rautaruukki works at Raahe in northern Finland, for example, 
was the main producer of iron and steel. The state and major 
engineering firms jointly owned the enterprise, an arrangement 
that ensured that the works responded well to the needs of indus- 
tries using their products. The works remained profitable during 
the late 1970s and the early 1980s, a period marked by the decline 
of the European steel industries. This success was due not only to 
adept management but also to good labor relations. Likewise, the 
state-owned Outokumpu Group, which possessed flash- smelting 
technology that gave it a major advantage during the mid-1980s, 
controlled much nonferrous metals production. While most of Fin- 
land's iron and steel were used at home, most of its copper, zinc, 
and nickel were exported. 

Machine Building 

Based on sophisticated technologies and on careful specializa- 
tion, machine building was an essential complement to other 
industries, but it was growing slowly by the late 1980s. Employ- 
ing about one-third of the metalworkers, the sector concentrated 
on such product lines as sawmill and papermill machinery and min- 
ing equipment. By the late 1980s, Finland had captured about one- 
fifth of the world market for papermaking equipment, and it led 
in selected metal-processing technologies. The branch also had 
increased its capability to produce cranes, lifts, hoists, forklifts, and 
cargo-handling vehicles. Another strong point was agricultural and 
forestry machinery, including tractors, combines, and logging 
machines, of which Finland was the largest producer in Nordic 
Europe. As Finland's economy matured, however, investment in 
capital goods declined, forcing the sector to search for markets 
abroad. Although Finnish equipment enjoyed a strong reputation 
abroad, demand for the country's specialties was limited. 



186 



The Economy 



Transport Equipment 

Shipbuilding, which had led the development of heavy indus- 
try, continued to be the most important branch of the transport 
sector, and it determined the sector's health. The land transporta- 
tion branch, however, led by exports of railroad locomotives and 
rolling stock to the Soviet Union, provided a valuable supplement 
to shipbuilding. Finlaind first began to produce automobiles in 1969, 
and it had developed a full range of vehicles. 

By the late 1980s, Finland's shipbuilding industry ranked fifteenth 
worldwide. The country boasted eight major shipyards, which em- 
ployed about 14,000 highly skilled workers. Unlike many other 
countries (including nearby Norway), Finland had avoided large 
investments in petroleum tankers, a choice that proved to be a bless- 
ing when the world tanker market slumped in the late 1970s. 
Instead, Finland had specialized in high-priced vessels such as 
icebreakers, luxury liners, car ferries, ocean exploration vessels, 
and container ships. Starting in the 1970s, shipbuilders also had 
branched out into offshore oil-drilling platforms and equipment. 
Finnish icebreakers were world-famous — the country had produced 
about 60 percent of all icebreakers in service by the late 1980s. Fin- 
land also specialized in vessels designed to operate in arctic condi- 
tions. Such projects were well suited to Finnish expertise, and they 
yielded higher-value-added products that compensated for high 
input costs. 

Shipyards exported up to 80 percent of their production, which 
made them heavily dependent on world market developments. The 
shipbuilding industry had survived the difficult years following the 
1973 and the 1979 oil shocks without subsidies from the govern- 
ment (except for occasional favorable financial packages); these 
years had seen a wave of mergers and large-scale investments that 
had improved competitiveness. Above all, the industry owed its 
success to continued orders from the Soviet Union in a period when 
demand lagged in Western markets. Finland was thus the one 
European country in which the number of shipyard workers had 
increased after 1975. During the same period, the Finns built two 
new shipyards for oceangoing vessels, established a heavy engineer- 
ing works for oil-drilling rigs, and modernized older yards. 

By the late 1980s, however, it appeared that shipbuilding was 
entering a crisis. The decline in the price of oil in the middle of 
the decade caused a reduction in Soviet purchasing power, limit- 
ing new orders for ships (see Regiongil Economic Integration, this 
ch.). Moreover, Soviet buyers, who had long preferred Finnish 
ships, had started to place orders with other countries, including 



187 



Finland: A Country Study 

East European firms that enjoyed lower labor costs. At the same 
time, certain Finnish specialties, such as icebreakers, were attracting 
competition from more advanced shipbuilding countries such as 
Japan. 

The crisis in shipbuilding led to a decline in employment and 
to further restructuring. In July 1986, two of Finlaind's four major 
shipbuilding companies, Wartsila and the Valmet Group, merged 
their shipbuilding divisions and planned to eliminate about 40 per- 
cent of their 10,000 jobs. Another several thousand workers were 
out of work, and the increased competition from the new firm threat- 
ened the two remaining firms, Rauma-Repola and Hollming. 
Indeed, competition had already undermined an arrangement un- 
der which each firm specialized in a particular field: Wartsila in 
icebreakers and luxury liners, the Valmet Group in cargo ships, 
Rauma-Repola in offshore oil equipment, and Hollming in high- 
technology research vessels. As the crisis continued, industry 
analysts began to question whether the industry could survive 
without government bailouts. 

Electrical Equipment and High Technology 

Production of electrical equipment had started somewhat slow- 
ly, but during the 1970s and the 1980s the branch grew rapidly. 
The branch produced both heavy goods — such as power plant 
generators, heavy-duty electric motors, and equipment for ice- 
breakers — and lighter goods — such as household appliances, light- 
bulbs, and building components. By the mid-1980s, however, the 
heavy electrical engineering producers were experiencing stagnant 
markets and fierce competition. Electronics, however, grew rapidly, 
expanding its product range from consumer electronics to include 
computers; communications equipment; and monitoring, con- 
trol, and measuring equipment. The Finns developed particular 
competence in control systems for the mining, metallurgical, and 
forestry industries; computers for hospitals and laboratories; patient- 
monitoring machines; meteorological instsillations; and tele- 
phone equipment. Finland, which included many areas that were 
too sparsely populated to allow the construction of a comprehen- 
sive telephone network, also was one of the world's leaders in the 
production of mobile telephones. 

Although electronics was still small compared with other indus- 
tries, many Finns believed that it had good prospects and that it 
might eventually make up for the impending decline of shipbuild- 
ing and other traditional industries. Thus, in the mid-1980s, both 
industry and government began to pay increasing attention to the 
development of high technology, especially in the electronics 



188 



Finnish-built oil-drilling rig Dyvi Delta in the North Sea 
Courtesy Embassy of Finland, Washington 

industry. The Finns seemed intent on specializing in high- value- 
added products in which the country had a comparative advan- 
tage, an approach similar to that which had proved so successful 
in other sectors. 

The leaders of the electronics industry, aware that the small sizes 
of their firms made it difficult to compete, banded together to share 
research and development expenses. The government facilitated 
cooperation among firms through the Technology Development 
Center (Teknologian Kehittamiskeskus — TEKES) established in 
1983. Electronics firms were also willing to join international 
research and development consortia that offered access to foreign 
technologies. However, despite the rapid development of high- 
technology electronics in Finland, by the late 1980s it was still too 
early to predict how well Finnish producers would be able to com- 
pete in world markets. 

Other Industries 

Several smaller sectors contributed significantly to industrial out- 
put. Food processing — concentrating on dairy products, baked 
goods, and preserved meats — grew during the postwar period, 
as rapid urbanization heightened reliance on processed foods. 
Indeed, as late as 1970 food processing was the largest sector in 
terms of gross value of production (but in terms of value added, food 



189 



Finland: A Country Study 

processing ranked only third that year, behind wood and metal 
processing). Nevertheless, during the 1970s and the 1980s, food 
processing suffered a relative decline. 

In the 1980s, the food industry undertook an ambitious research 
program aimed at foreign markets. Finnish firms hoped to develop 
special foods for the cafeterias of hospitals, mines, and oil rigs as 
well as to develop delicacies, such as fresh berries and fresh-water 
fish. New technologies, such as plant and animal genetics, freeze- 
drying, irradiation, aseptic production, and methods to limit food 
oxidation, promised to improve the attractiveness of Finnish 
products. Another export was highly automated equipment for bak- 
eries, dairies, and slaughterhouses. Although Finland's high produc- 
tion costs limited exports of staple foodstuffs, observers believed 
that the industry could expect to sell special products in Europe 
and in North America. 

Finland's chemical industry, established at the time of indepen- 
dence, had come a long way by its seventieth anniversary in 1987. 
By the late 1980s, the sector ranked fourth after wood, metal, and 
food processing. Oil refining accounted for about half the gross 
value of chemical production, followed by fertilizers, plastics, fibers, 
rubber products, and other chemicals. Two large, state-owned firms 
controlled more than half of chemical production. Neste, estab- 
lished in 1948, was the only oil-refming enterprise. Its chemical 
operations had grown out of refining, while its rival, the Kemira 
Group, had developed interests in many products, including fer- 
tilizers, paints, fibers, and industrial chemicals. During the 1980s, 
both companies had purchased production facilities abroad in an 
attempt to remain on top in an international market that suffered 
from overcapacity in many basic product lines. 

Construction, which accounted for almost 10 percent of GDP 
in 1950, declined to less than 8 percent of GDP during the post- 
war period, as the country completed its transportation and energy 
infrastructure and established heavy industry. In the short term, 
construction activities depended on the overall health of the econ- 
omy. Thus, new building slumped from 1984 to late 1986 because 
of a recession and because many industries invested more in new 
machines than in new buildings. Residential construction was also 
slow in the mid-1980s, but it responded to financial stimuli after 
1985. By late 1986, both commercial and domestic building were 
on the rise, increasing by an estimated 3 percent in 1987. Finland 
also exported construction services, especially to the Third World 
and to the Soviet Union, usually to complement exports of machine 
goods. The industry was able to offer clients all types of planning, 
engineering, and building services for turnkey factories. 



190 



The Economy 



Textiles and ready-made clothing, two of the country's oldest 
industries, concentrated on cotton, wool, and knitted goods. Dur- 
ing the postwar period, this sector had declined in relation to other 
industries; however, in the 1980s, Finland still produced high- 
quality fabrics and fashions for export, especially to Europe. Like- 
wise, Finnish fur and leather designs had carved out export mar- 
kets in the developed countries. 

Services 

Although the Finns continued to place a high value on agricul- 
tural and industrial employment, by the 1980s the economy had 
already entered an era characterized by the development of ser- 
vices. While in 1950 services accounted for only 35 percent of total 
domestic output, the sector provided over 55 percent in 1985. The 
postwar development of a welfare state stimulated growth in the 
state sector, and other activities, such as financial and engineer- 
ing services, expanded as the economy industrialized (see Welfare 
System, ch. 2). Services traditionally remained insulated from 
international markets, but during the 1980s the government 
encouraged the development of service exports and even allowed 
foreign enterprises to enter such previously protected markets as 
those in financial services. In line with this liberalization, the govern- 
ment repealed regulations that hampered the working of markets 
in services, causing the important branches of the sector to become 
efficient enough to compete in world markets. 

Banking and Finance 

Under the regulatory structures that had developed since the mid- 
nineteenth century, banks had dominated the financial scene, leav- 
ing the stock market and insurance companies to play secondary 
roles. Control over investment capital gave a few large banks great 
power. Distinct laws for each type of bank contributed to the 
development of a fragmented banking structure in which separate 
types of institutions served different purposes. Closely regulated 
by the central bank, the operations of which depended less on mar- 
ket mechanisms than on capital rationing, the traditional finan- 
cial system served Finland's postwar reconstruction and 
industrialization well. This same system, however, appeared out- 
dated in the dynamic international markets of the 1970s and the 
1980s. As a consequence, a process of deregulation and interna- 
tionalization was begun, which led to rapid changes in the finan- 
cial sector. Observers expected further changes during the late 1980s 
and the early 1990s. In mid- 1988 the process of liberalization was 
still incomplete, however, and many institutions retained their 



191 



Finland: A Country Study 

customary roles, making Finland's financial system a peculiar mix- 
ture of new and old. 

Founded in 1811, the Bank of Finland (BOF) first provided the 
services of a true central bank in the 1890s. Formally independent, 
the BOF's management comprised bodies responsible to both the 
executive and the legislative branches of government. The gover- 
nor and a board of directors, who were appointed by the president 
of Finland, controlled day-to-day operations. A nine-member 
supervisory council, named by and responsible to the Eduskunta, 
reviewed bank policy and made most fundamental decisions, 
especially those regarding monetary policy. The BOF served as 
the lender of last resort, and it regulated the currency and the finan- 
cial markets. It also determined monetary policy and participated 
in the formulation of government economic strategies (see Role 
of Government, this ch.). 

Although BOF policy originally had concentrated on maintain- 
ing the value of the currency, during the Great Depression of the 
1930s the influence of Keynesian theories began to modify bank 
policies. After World War II, the BOF developed regulations 
designed to favor reconstruction and the development of manufac- 
turing, and these remained in force almost unchanged throughout 
the 1960s. The regulations were part of a comprehensive govern- 
ment scheme for financial markets that included foreign-exchange 
restrictions, regulation of bank lending rates, a quota system for 
bank borrowing from the BOF, and an interbank agreement on 
deposit rates. At the heart of the system were tax rules that made 
interest earnings on bank deposits tax-free and interest charges paid 
by companies on loans fully deductible. These two measures com- 
bined to favor bank deposits and to facilitate debt financing for 
industry. The BOF used this panoply of regulations to hold bor- 
rowing rates artificially low — generally at negative real rates — to 
favor investment. As money markets were not in operation, the 
BOF resorted to distributing specific quotas of credits to commer- 
cial banks. Strict limits on the foreign-exchange market protected 
the system from international competition. 

Besides the central bank, the banking system included a small 
number of commercial banks based in Helsinki, many local 
branches of cooperative and savings banks, and a small number 
of state-owned banks. The commercial banks differed from the 
others because they could borrow directly from the BOF, and they 
controlled most corporate banking. The networks of savings and 
cooperative banks primarily served households, which provided a 
solid deposit base. The split between the two banking networks was 
not absolute, however, as the savings banks and the cooperative 



192 



The Economy 



banks had formed their own so-called central banks, which enjoyed 
commercial bank status. 

Finland's commercial banks were the real leaders of the finan- 
cial industry, and they controlled most lending to Finnish corpo- 
rations. Although about ten banks were considered to be commercial 
banks, only two — the Suomen Yhdyspankki (Union Bank of 
Finland — UBF) and the Kansallis-Osake-Pankki (KOP) — were 
national banks with extensive branch networks. The four foreign- 
owned banks active in Finland also operated as commercial banks. 

The cooperative and savings banks served a wide range of 
regional and local customers, but usually exercised relatively little 
economic power. They tended to specialize in providing home and 
farm banking services in rural areas. The savings banks were non- 
profit banks designed to promote saving, and they served small- 
scale trade and industry as well as households. 

Although private banks formed the backbone of Finland's finan- 
cial structure, state-owned banks still accounted for about one- 
quarter of bank assets in the mid-1980s. The most important of 
these, the Postipankki, had about 40 branches of its own and made 
its services available at windows in more than 3,000 post offices 
throughout the country. Other state banks included the Industri- 
alization Fund of Finland, Finnish Export Credit (partially owned 
by commercial banks and private industry), and the State Invest- 
ment Fund and Regional Development Bank, both of which 
invested in underdeveloped regions and in industries with capital 
requirements that were too large for private firms. Finland's com- 
mercial banks traditionally were allowed to hold as much as 20 per- 
cent of the total assets of Finnish corporations, and the leading banks 
had substantial holdings in the largest corporations. A 1987 law 
reduced the cap on bank ownership of corporate assets, but the 
banks' real power derived from their control over capital supplies. 
During the long postwar period of negative real interest rates, banks 
controlled the supply of capital — much of which was imported from 
abroad by the BOF. The two largest banks, KOP and UBF, built 
up rival spheres of influence that extended to many of Finland's 
largest industrial firms. 

The crises and the restructuring of the late 1970s and the early 
1980s provided the leading banks with further opportunities to 
strengthen their hold on Finnish industry. Starting in the late 1970s, 
KOP and UBF arranged many mergers among the wood-processing 
companies; by the mid-1980s, they had turned their attention to 
rationalization in the metal-processing industry. Several banks also 
engaged in takeover battles through the Helsinki Stock Exchange. 



193 



Finland: A Country Study 

In the 1970s, several developments combined to reshape the oper- 
ations of the postwar financial system. First, many corporations 
began to search for investment opportunities that offered both 
liquidity and higher rates of return than those offered for bank 
deposits. Second, as Finland shifted from importing capital to 
investing abroad, the old restrictions on foreign-exchange trans- 
actions became burdensome. Finally, a number of major Finnish 
corporations, having large shares of the domestic market, sought 
to expand abroad. Some, intent on foreign acquisitions, wanted 
to sell stocks on world exchanges in order to build assets sufficient 
for world- scale operations. 

By the late 1970s, in response to the increasing internationali- 
zation of corporate life, the BOF management became convinced 
of the need to liberalize the regulatory system. The bank relaxed 
controls on borrowing abroad, and it allowed the establishment 
of an interbank money market; at the same time, the banks began 
to compete on interest rates for large deposits. These two develop- 
ments caused Finnish interest rates in the corporate market to float 
up toward world levels, while the rates for most small depositors 
remained controlled. In 1982 the BOF allowed foreign-owned banks 
to open branches in Finland. In 1984 the BOF permitted Finnish 
banks to establish branches abroad, abolished bank-specific credit 
allocation, and began to levy identical reserve requirements on all 
banks. In 1987 legislation on bank deposits eliminated their tradi- 
tional tax-free status. And in early 1988, the government proposed 
new banking laws that would put all major banks on the same legal 
footing. 

The BOF had thus been willing to deregulate corporate bank- 
ing partially, but important aspects of the regulatory system 
remained unchanged. The BOF continued to watch closely both 
foreign long-term borrowing and investments abroad by Finnish 
corporations. Retail banking continued much as before: small 
deposits placed at the regulated rates were tax-free, and the banks 
maintained their interest-rate cartel. The Finns had become 
accustomed to low and stable interest rates; proposals regarding 
interest were politically sensitive and might influence incomes agree- 
ments. Most observers thus expected that the BOF, ever cautious, 
would not rush toward further deregulation. 

One effect of the liberalization of financial regulations and the 
internationalization of Finnish commercial life was the revival of 
the Helsinki Stock Exchange. Turning away from debt financing, 
more and more corporations issued stocks and bonds in the 1980s. 
Starting in 1982, the stock exchange attracted foreign investors, 
who accounted for about one-third of turnover in 1985. Younger, 



194 



The Economy 



more prosperous Finns showed increased interest in stocks. As a 
result, although the market suffered a major slump in the second 
half of 1984, by late 1986 the stock index had increased tenfold 
compared with its 1980 level. 

Incorporated in 1984, and almost immediately shaken by alle- 
gations of insider trading, the stock exchange in 1985 issued new 
regulations that were intended to increase the openness of its oper- 
ations, thereby increasing its attractiveness for small investors. In 
1987 the government reduced restrictions on foreign investors and 
passed a law allowing banks and insurance companies to set up 
mutual funds. In the fall of 1987, options exchanges opened, offering 
new instruments to stock traders. Also likely to enliven the market 
was legislation of the same year that eliminated the tax-free status 
of bank deposits. As Finnish equities continued to offer better rates 
of return than those on many markets, stock brokers had good rea- 
son to be optimistic. 

Insurance companies, once marginal actors in capital markets, 
became Finland's largest institutional investors, after the establish- 
ment of compulsory insurance schemes in the early 1960s. After 
that time, insurance grew faster than the economy as a whole, and 
it contributed some 5 percent of GNP in the mid-1980s. As the 
result of restructuring in the early 1980s, there were about fifty 
insurance companies, associated in five large groups. The insur- 
ance companies placed about two-fifths of their investments in 
industry and an additional fifth in commerce. Other investments 
included other insurance firms and real estate. 

Transportation and Communications 

Finland's geography and climate make transportation and com- 
munications difficult. For centuries, coastal ports, which were closed 
by ice each winter for at least one month in the south and for as 
long as five months in the north, provided the only links with 
Europe. Internal communications, hampered by long distances 
interrupted by swamps and bogs, were likewise paralyzed each 
spring by slowly melting snows. As in most industrialized coun- 
tries, during the postwar period newer technologies supplanted 
traditional means of transport. Thus, in the early postwar years, 
truck traffic grew at the expense of rail and water transport, only 
to be displaced later by airplanes. Traditional mail gave way to 
telecommunications. External commerce still depended primarily 
on oceangoing ships, but air freight services provided an increas- 
ingly important supplement. 

The natural environment compensated somewhat for the difficul- 
ties of climate and geography in the form of a network of lakes 



195 



Finland: A Country Study 




Figure 18. Transportation System, 1986 



196 



The Economy 



and rivers that provided an economical means of moving forest 
products downstream to processing centers and on to ports for 
export. Although trucks handled more than half of Finland's forest 
products in the late 1980s, the wood industries still operated some 
9,200 kilometers of floatways. Internal waterways for general use 
covered another 6,100 kilometers, of which about 70 kilometers 
were canals. The most important artificial waterway, the Saimaa 
Canal, runs from Lake Saimaa to the Baltic port of Viipuri (see 
fig. 18), In 1962 the Soviet Union, which had annexed the water- 
way and the port after World War II, granted a long-term lease 
to Finland that allowed the Finns to renovate and to operate them. 

Finland lagged behind the other Nordic countries in developing 
railroads — as late as the early 1970s, Finland continued to lay tracks. 
Yet by the early 1980s, the railroads had begun to decline in 
importance, and of the more than 9,000 kilometers of track, less 
than 6,000 kilometers of track were in operation (25 percent of which 
was electrified). The rail network served southern and central Fin- 
land better than the north, and it speciadized in carrying bulk 
products to processing centers and to export ports. The railroads, 
almost all of which were state-owned, had lost business and were 
running operating deficits by the mid-1980s. Finnish railroads used 
the same gauge as Russian lines (1 .524 meters), which allowed easy 
exchanges with Soviet railroads but blocked shipments to Finland's 
Western neighbors. 

By 1987 Finland maintained about 76,000 kilometers of road- 
ways, of which 43,000 kilometers were paved roads and 200 kilo- 
meters were divided highways. During the first half of the 1980s, 
local routes accounted for most new road construction, as the 
national highways were largely complete. Although the highways 
covered most of the country, specialists reported that Finland would 
need to improve its major routes to meet European standards and 
to allow increased trade with Western Europe during the 1990s. 

By 1987 the Finns operated about 1.7 million automobiles, 9,000 
buses, 52,000 freight trucks, 135,000 vans and delivery trucks, and 
50,000 motorcycles. During the early 1980s, the number of vehi- 
cles had risen by almost 20 percent as more and more Finns pur- 
chased cars and motorcycles and many companies shifted from rail 
to road transport. 

Finland's position on the northern shore of the Baltic, far from 
the commercial centers of Western Europe, placed a premium on 
shipping. Because harbors freeze up each winter, the Finns have 
employed a fleet of icebreakers and have equipped many ships with 
strengthened hulls, the construction of which has become a specialty 
of the metal-working industry (see Industry, this ch.). The national 



197 



Finland: A Country Study 

oceangoing fleet expanded tenfold to about 2.5 million gross 
registered tons (GRT) between the end of World War II and about 
1980, but it shrank thereafter to about 1 .6 million GRT. The Fin- 
nish merchant marine carried most of the country's trade and 
provided a significant source of foreign exchange; however, mer- 
chant shipping declined somewhat in the 1980s because of compe- 
tition from air freight services and from foreign shipping. In the 
1980s, Finland's ports handled about 50 million net registered tons 
each year, of which 60 percent were exports. Ships also carried 
a significant number of passengers, 2 million of whom traveled by 
way of Helsinki. 

Air transport grew rapidly in the 1970s and the 1980s. For pas- 
sengers, domestic traffic was growing faster than international 
travel, but for freight, the reverse was true. Affordable air fares — the 
lowest in Europe — contributed to the rapid expansion of domestic 
air travel. Almost 3 million passengers and more than 50,000 tons 
of freight and mail passed through the main airport, Helsinki- 
Vantaa, each year. Finland also operated about forty smaller 
airports. 

Two state-controlled firms, Finnair and Karair, dominated Fin- 
nish airways. The state owned a majority of shares in Finnair 
(founded in 1923), which maintained regular international and 
domestic service. Karair, established in 1957, was linked to Fin- 
nair (which owned a majority interest) and specialized in charter 
flights. 

Finland's postal and telecommunications services maintained 
efficient links among the country's thinly settled population. In the 
late 1980s, the government operated about 3,600 post offices and 
581 telegraph bureaus. Nevertheless, many rural areas were so 
sparsely inhabited that the postal carriers made deliveries to groups 
of mailboxes located at crossroads. The relatively great distances 
among settlements made telecommunications popular; by the late 
1980s, telecommunications had become more important than tradi- 
tional postal services. Among European states, Finland was unusual 
in maintaining a combination of public and private telephone sys- 
tems. Some fifty-eight companies provided services in local com- 
munities, while the Public Telecommunications Agency (PTA) 
enjoyed a monopoly on long-distance services. Starting in the 
mid-1980s, local companies began to compete in the lucrative data 
transmission field, a move that put them in competition with the 
PTA's long-distance services. Observers expected that pending 
legislation would effectively deregulate the telecommunications 
market. 



198 



The Economy 



Tourism 

Tourism was a small industry in Finland, accounting for only 
4 percent of total exports in 1987. Since 1982, however, Finns had 
spent more abroad than foreigners had spent in Finland, and eco- 
nomic policy makers sought to foster tourism to reduce this deficit. 
Tourists found many attractions, both natural and cultural, in Fin- 
land; moreover, facilities for vacationers were well developed. Public 
transport — including tourist buses and ships plying scenic interior 
waterways — offered easy access to the country's main tourist areas. 
In the mid-1980s, Finland had about 550 hotels and 230 boarding 
houses. During the 1980s, the number of rooms in hotels rose, as 
did the number of places in youth hostels. Campers found plenti- 
ful sites, including some with firewood and even shelters, along 
an extensive network of trails. Information offices in major cities 
in Finland and abroad offered information and orientation for 
visitors. 

Despite manifold attractions and excellent facilities, the tourist 
industry lagged during the 1980s. Tourist earnings declined by 
about one-third during the early 1980s, perhaps as a result of Fin- 
land's relatively high cost of living, which made the country some- 
what expensive for tourists. 

Foreign Economic Relations 

International economic relations — especially foreign trade — have 
been vital for Finland throughout the twentieth century, but never 
have they been more so than during the 1980s. The country was 
self-sufficient in staple foods, and domestic supplies covered about 
70 percent of the value of the raw materials used by industry. 
However, imports of petroleum, minerals, and other products were 
crucial for both the agricultural and the industrial sectors. From 
the end of World War II until the late 1970s, the development of 
modern infrastructure and new industries required substantial cap- 
ital imports. Sound foreign economic relations made it possible to 
exchange exports for needed imports and to service the large for- 
eign debt. A policy of removing obstacles to the mobility of com- 
modities, services, and factors of production facilitated economic 
modernization. 

Business leaders and government policy makers devised inno- 
vative strategies to manage economic relations. Close economic 
ties to the Soviet Union grew out of the postwar settlement under 
which Finland agreed to pay reparations and to maintain a form 
of neutrality that would preclude threats to Soviet security (see The 
Effects of the War, ch. 1; Foreign Relations, ch. 4). Except for 



199 



Finland: A Country Study 

agriculture, which remained strictly protected, postwar commer- 
cidl policy sought to link Finland's economy with the economies 
of the Nordic area and of Western Europe as closely as possible 
without aggravating Soviet fears that such economic ties would 
undermine loyalty to the East. Thus, since 1957 Finland had pur- 
sued trade liberalization and had established industrial free-trade 
agreements with both West European and East European coun- 
tries. Spurred by these liberal policies, exports and imports had 
each grown to account for roughly one-quarter of GDP by the 
mid-1980s. By the late 1980s, Finnish industrial and service firms 
were going beyond trade to internationalize production by attracting 
foreign partners for their domestic operations and by acquiring for- 
eign firms. Most observers believed that Finnish firms needed to 
follow an international tack not only to protect export shares but 
also to maintain their positions in domestic markets. 

Foreign Trade 

Trade in agricultural commodities, consumer products, and ser- 
vices had been relatively limited, but exchanges with the outside 
world were crucial for industry. Not only had the forest industries 
grown largely in response to foreign demand for wood and paper, 
but the metal-working industry had 2ilso taken off only under the 
goad of postwar reparations deliveries to the Soviet Union. By the 
mid-1980s, exports accounted for half of adl industrial output and 
for as much as 80 percent of the output of the crucial forest indus- 
tries. Similarly, imports of energy, raw materials, and investment 
goods remained essential for industrial production. The develop- 
ment of export-oriented industries had driven Finland's postwar 
structural transformation, indirectly affecting the rest of the econ- 
omy. Industrial competitiveness would largely determine the econ- 
omy's overall health into the 1990s. 

During the postwar period, Finnish exports shifted from lum- 
ber and other raw materials to increasingly sophisticated products, 
a change which reflected the increasing diversification of the coun- 
try's economic structure. The forest industries continued to 
dominate exports, but, while they had accounted for about 85 per- 
cent of total exports in 1950, they accounted for only 40 percent 
by the mid-1980s. The relative shares of different forest exports 
also shifted. Sawn timber and various board products accounted 
for more than one-third of total exports in 1950, but by 1985 they 
had fallen to only 8 percent. Exports of pulp and paper fell more 
gradually during the same period, from 43 percent of exports to 
about 30 percent. Pulp and cardboard, the main exports of the 
chemical wood-processing branch, declined in importance, while 



200 



The Economy 



specialized paper products incorporating higher value added, such 
as packing material, printed paper, and coated paper, grew in 
importance. 

Taking the place of forest products, exports of metal products 
grew rapidly during the postwar period from a little over 4 per- 
cent of exports to about 28 percent. Here, too, exports of more 
sophisticated manufactured goods grew faster than those of basic 
products. By the late 1980s, basic metals accounted for about 20 
percent of metal exports, ships for about 25 percent, and machinery 
and equipment for about 20 percent. Advanced products such as 
electronics and process-control equipment were gaining on con- 
ventionally engineered products. The chemical industry had 
exported relatively little until the 1970s, but by 1985 it had grown 
to account for about 12 percent of exports. By contrast, the tex- 
tile, confectionery, and leather goods industries had peaked at over 
10 percent in the late 1970s and early 1980s, and then they had 
fallen to about 6 percent of exports by the mid-1980s. Minor export 
sectors included processed foods, building materials, agricultural 
products, and furs. 

Up to the 1970s, Finland tended to export wood-based products 
to the West, and metal and engineering products to the East. By 
the mid-1980s, however, Finnish machines and high-technology 
products were also becoming competitive in Western markets. 

Finland's imports had consisted primarily of raw materials, ener- 
gy, and capital goods for industrial production, and in the late 1980s 
these categories still accounted for roughly two- thirds of all imports. 
The commodity structure of imports responded both to structural 
changes in domestic production and to shifts in world markets. 
Thus, the heavy purchases of raw materials, energy, and capital 
goods up until the mid-1970s reflected Finland's postwar industri- 
al development, while the subsequent period showed the influences 
of unstable world energy prices and Finland's shifts toward high- 
technology production. Imports of investment goods climbed from 
about 15 percent in 1950 to almost 30 percent in the late 1960s 
and early 1970s, only to fall again by the 1980s to about 15 per- 
cent. Foodstuffs and raw materials for the textile industry accounted 
for about half of all raw material imports during the 1950s, but 
by the 1980s inputs for the chemical and metal-processing indus- 
tries took some 75 percent of raw material imports. World energy 
prices had strongly influenced Finnish trade because the country 
needed to import about 70 percent of its energy. After rising slowly 
until the early 1970s, the value of oil imports had jumped to almost 
one-third of that of total imports in the mid-1970s, then had fallen 
with world oil prices to about 13 percent by the late 1980s. 



201 



202 




Helsinki's South Harbor closed by ice: on the right, the President's 
Palace; in the background, the dome of Helsinki Cathedral 
Courtesy Embassy of Finland, Washington 



203 



Finland: A Country Study 

Like its export markets, Finland's import sources were concen- 
trated in Western Europe and the Soviet Union (see table 19, 
Appendix A). The country usually obtained raw materials, espe- 
cially petroleum, from the East and purchased capital goods from 
the West. 

Finnish service exports had exceeded service imports until the 
early 1980s. Up until this time, shipping and tourism earnings had 
generally exceeded interest payments to service the national debt. 
In the mid-1980s, however, the balance was reversed as the earn- 
ings of the merchant marine declined and Finns began to spend 
more on tourism abroad. Although Finnish businesses tried to com- 
pete in these labor-intensive sectors, the country's high wage lev- 
els made shipping and tourism difficult to export. 

Like other Nordic countries, Finland's trade was concentrated 
in the Nordic area and in Europe. Unlike the others, however, Fin- 
land had, as its most important trading partner, the Soviet Union. 
During the postwar years, trade with the Soviets had expanded 
and contracted in response to political developments and market 
forces. During the immediate postwar period, the Soviet share of 
Finland's trade, spurred by reparations payments, rose to over 30 
percent. However, the following two decades saw this share gradu- 
ally decline as Finland expanded exports to Western Europe. A 
second cycle began after the 1973 oil crisis, when recession in 
Western markets cut demand for Finnish products while the 
increased value of Soviet oil deliveries to Finland allowed expanded 
exports to the East. Finnish exports to the Soviet Union rose sharp- 
ly during the years after 1973, only to fall — along with world petrole- 
um prices — by 1986. 

By the late 1980s, the geographical distribution of Finlcind's trade 
was moving back to the pre- 1973 pattern. In 1986, for example, 
although the Soviet Union continued to be Finland's single larg- 
est trade partner, trade with West European countries, which 
together accounted for about 61 percent of Finnish trade, was much 
more important than trade with the Soviet Union. Finland's main 
trade partners in Western Europe were Sweden, which took the 
biggest share of Finnish exports, and the Federal Republic of Ger- 
many (West Germany), which supplied the largest slice of Finnish 
imports. East European countries other than the Soviet Union 
accounted for only slightly over 2 percent of trade. Non-European 
countries were responsible for some 19 percent of trade. The United 
States, Finland's main non-European trade partner, accounted for 
over 5 percent of Finnish exports and imports in 1987. 

As in many small European countries, the postwar trade policy 
of Finland had been to pursue free trade in industrial products 



204 



The Economy 



while protecting agriculture and services. During the 1980s, strict 
quotas still blocked imports of most agricultural commodities (except 
for tropical products that could not be produced domestically), but 
liberalized regulations allowed increased imports of services, 
especially financial services. Most industrial imports and exports 
were free of surcharges, tariffs, and quotas under multilateral and 
bilateral agreements between Finland and its major trading part- 
ners (see Regional Economic Integration, this ch.). Health and secu- 
rity concerns, however, inspired restrictions on imports of products 
such as radioactive materials, pharmaceuticals, arms and ammu- 
nition, live animals, meat, seeds, and plants. With a few excep- 
tions, Finland discontinued export licensing in the early 1960s. The 
State Granary, however, controlled all trade in grains, while the 
Roundwood Export Commission reviewed all lumber exports. 

Finnish Direct Investment Abroad 

From the end of World War II until the 1970s, Finland imported 
large amounts of capital to finance infrastructure investment and 
industricd development; however, by 1987 Finnish capital exports 
exceeded capital imports by about six to one. During the earlier 
period, foreign firms had set up subsidiaries in Finland, but few 
Finnish enterprises had established branches abroad. In the 1970s, 
the forest industry led a shift toward capital exports by founding 
sales outlets in the most important foreign markets, especially in 
Western Europe. The metalworking and chemical industries did 
not begin to expand overseas until the late 1970s, but they made 
up for lost time during the following decade. These industries first 
invested in Sweden, Norway, and Denmark, important markets 
sharing Nordic culture. Next came subsidiziries in the United States, 
which by the mid-1980s became the second-largest recipient of Fin- 
nish investments after Sweden and which hosted more than 300 
Finnish manufacturing and sales firms. In the late 1980s, some firms 
targeted markets in the rapidly expanding economies of the Pacif- 
ic basin. Beginning in the late 1980s, the service sector began to 
follow industry abroad. Banks, insurance companies, and engineer- 
ing and architectural firms established branches in major business 
centers worldwide. By the late 1980s, Finnish firms owned more 
than 1,600 foreign concerns, of which some 250 were engaged in 
manufacturing; more than 900 in sales and marketing; and 450 
in other functions. 

Businessmen had many motives for setting up overseas 
operations. In general, the Finns wanted to deepen ties with indus- 
trialized countries where consumers and businesses could af- 
ford high-quality Finnish goods. Maintaining access to important 



205 



Finland: A Country Study 

markets in an era of increasing protectionism and keeping up with 
new technologies had become crucial. Finnish enterprises, gener- 
ally small by international standards, needed additional sources 
of capital and know-how to develop new technologies. Analysts be- 
lieved that, despite their small size, Finnish firms could succeed 
abroad if they followed a comprehensive strategy, not only selling 
finished products but also offering their services in the manage- 
ment of raw materials and energy, development of new technolo- 
gies, and design of attractive products. 

Government policies helped achieve greater international integra- 
tion of productive facilities. During the 1980s, legislation relaxed 
limits on foreign investment in Finnish firms, allowing foreigners 
to hold up to 40 percent of corporate equities; likewise, the BOF 
loosened restrictions on capital exports. The Technology Develop- 
ment Center (TEKES), under the Ministry of Trade and Indus- 
try, sponsored international cooperation in research and 
development. The government also arranged for Finnish partici- 
pation in joint projects sponsored by the European Space Agency 
(ESA) and the Europe2in Community (EC — see Glossary), includ- 
ing the EC's Eureka technology development program. Although 
it was still too early to predict how Finland would perform in 
international joint ventures, many observers felt that such enter- 
prises were the best way for the country to achieve industrial 
progress. 

Balance of Payments 

Finland's external balance reflected the country's status as a late- 
industrializing economy needing large infusions of foreign capital 
as recently as the 1970s. The resulting foreign debt peaked at the 
end of 1977 at about 20 percent of GDP. Over the following decade, 
the Finns reduced their debt, which stood at about 16 percent of 
GDP in 1987. Even at this lower level, however, debt service re- 
quired payments amounting to over 2 percent of GDP, a perma- 
nent drag on the balance of payments. 

Although the country ran trade deficits up until the 1970s, Fin- 
land's trade performance was generally satisfactory during the 
1980s, despite developments in world markets that posed special 
challenges, such as the need to shift exports rapidly from Eastern 
to Western markets after the collapse of oil prices in the mid-1980s. 
The balance of trade showed a surplus after 1980, which rose to 
about US$1 .6 billion by 1986 as a result of strong foreign demand 
for Finnish goods (see table 20, Appendix A). The services account, 
however, showed growing deficits during the decade, which reached 
more than US$2.2 billion in 1986. The deficit on services grew 



206 



The Economy 



out of increased Finnish tourist expenditures abroad, the dedine 
in shipping earnings, and the continued service payments on the 
national debt. The transfers account likewise showed a deficit, main- 
ly the result of Finland's growing official foreign aid to the Third 
World. Thus, despite the strong performance of Finland's export 
sector, the country had generated a deficit on the current account 
that reached almost US$900 million in 1986. 

Over the long term, Finland's ability to continue to finance cur- 
rent account deficits and to service the national debt was limited 
primarily by the country's ability to maintain export earnings. Some 
analysts pointed out that after 1984, Finland's surpluses were in 
fact earned in exchanges with the Soviet Union (producing a sur- 
plus on a blocked account), while hard-currency trade was in deficit. 
Many observers noted, however, that Finland's debt was low by 
OECD standards, and they suggested that the country's external 
imbalances could be sustained for many years. 

Regional Economic Integration 

Until 1917 the Grand Duchy of Finland enjoyed a privileged 
position as a relatively advanced part of the Russian Empire, sup- 
plying metal products and ships in exchange for agricultural goods. 
These ties collapsed, however, when political tensions between the 
Bolshevik regime and the Finnish Republic precluded commercial 
agreements. The interwar pattern was reversed in the years fol- 
lowing World War II, as reparations payments and barter trade 
grew into a close trading relationship in which Finland exported 
industrial goods, especially capital goods, in exchange for raw 
materials and fuels — an arrangement roughly parallel to that which 
had existed before 1917. 

Starting in the late 1950s, however, Finland broke away from 
its dependence on the Soviet market, successfully opening its econ- 
omy to the two West European trading blocks, the European Eco- 
nomic Community (EEC — see Glossary) and the European Free 
Trade Association (EFTA — see Glossary). Expanded trade with 
the West did not imply renunciation of profitable exchanges with 
the East, however, because Finnish commercial ties with the Soviet 
Union and with the other members of the Council for Mutual Eco- 
nomic Assistance (CMEA, CEMA, or Comecon — see Glossary) 
deepened after 1960. By the late 1980s, Finland provided a unique 
example of a neutral country with a free-market economy that had 
developed increasing economic interdependence with both the mar- 
ket economies of Western Europe and the planned economies of 
Eastern Europe. 



207 



Finland: A Country Study 

Although many Western observers saw in Finnish foreign eco- 
nomic poUcy the dominance of security concerns over economic 
interests, close inspection revealed a mixture of motives. The guid- 
ing principles of postwar foreign policy — Finland's need to assure 
the Soviet Union that it did not have to fear threats from (or 
through) Finnish territory as well as Finland's practice of active 
neutrality — influenced trade policies toward the East, especially in 
the immediate postwar years. Such concerns blocked Finnish par- 
ticipation in the Marshall Plan and in the Organisation for Euro- 
pean Economic Co-operation (OEEC), which was established to 
coordinate the use of Marshall Plan aid (see Foreign Relations, 
ch. 4). Trade with the East also served important economic interests, 
however, driving the rapid development of the metalworking 
industries during the 1950s and helping to absorb labor released 
from the modernizing farm sector. In the years after the 1973 oil 
crisis, Finnish exports to the Soviet Union also provided an essen- 
tial market at a time of recession in Western markets. Commenta- 
tors suggested that by the 1980s, the Finns, less concerned with 
security than they had been in the early postwar years, based policy 
decisions almost exclusively on market considerations. 

Ties to West European Markets 

Although trade with Western Europe developed slowly in the 
early postwar years, by the 1980s it was more important than trade 
with the East. During the early and mid-1950s, when the West 
European countries liberalized trade and exchange regulations 
under the OEEC , Finland maintained import and export controls 
inherited from World War II and the reparations years. Conduct- 
ing almost all trade under bilatercil agreements (except for occa- 
sional trilateral deals worked out with the Soviet Union and another 
East European country), Finland saw its trade grow only slowly. 
Thus, although the forest industries were competitive, the econo- 
my as a whole remained isolated. The Finns did participate to a 
limited extent in international economic organizations, joining the 
International Monetary Fund (IMF — see Glossary), the World 
Bank (see Glossary), and the General Agreement on Tariffs and 
Trade (GATT — see Glossary) in the late 1940s. The country also 
became a member of the Nordic Council and agreed to a Nordic 
labor market, but did not favor a Nordic common market because 
of Soviet opposition. Faced by the growing movement toward West 
European economic integration after 1955, Finland ran the risk 
of remaining on the sidelines, not only because of Soviet pressures 
but also as a result of domestic protectionism. 



208 



The Economy 



It was not until 1957 that the Finns first shifted their policy toward 
Western Europe in a move designed to protect access to tradition- 
al export markets, especially in Britain, and to shift economic 
activity to branches in which the country had a comparative ad- 
vantage at a time when extensive economic growth was reaching 
its limits. The new policy package combined an austerity program, 
a sharp currency devaluation, and multilateral tariff reduc- 
tions for trade in industricil goods arranged through the Helsinki 
Club, which was a model for further trade agreements. In effect, 
Soviet opposition had blocked Finnish membership in the OEEC , 
leading the Finns to set up the Helsinki Club, which the OEEC 
countries, agreeing to apply their liberalized import lists to Fin- 
nish goods, then joined. In 1958 Finnish authorities further liber- 
alized trading conditions by making the Finnish mark convertible 
in European markets. 

Since the late 1950s, Finland has consistently pursued freer trade 
in industrial products with the members of EFTA and the EEC , 
while protecting domestic agriculture to maintain food supplies and 
while controlling oil imports to safeguard trade with the Soviet 
Union. Under the FINEFTA agreement, signed in March 1961, 
Britain and other EFTA states extended associate membership and 
free-trade arrcingements to Finland. In 1969 Finland joined the Or- 
nisation for Economic Co-operation and Development (OECD — see 
Glossary), the successor to the OEEC. Although the OECD played 
a minor role in commodity trade, its recommendations regarding 
cooperation among industrialized free-market economies touched 
on issues such as freer trade in services Eind liberalized capital trans- 
fers. When two important trading partners, Britain and Denmark, 
switched from EFTA to the EEC, Finland (like the other EFTA 
states) negotiated with the EEC an industrial free-trade agree- 
ment that came into effect in 1974. In 1986 Finland became a regu- 
lar member of EFTA, the Soviet Union finally having recognized 
that the organization posed no threat to its security or its trade 
interests. Under these free-trade agreements, virtucilly all Finnish 
industrial goods entered West European markets duty-free (but 
they sometimes faced troublesome nontariff barriers). These ar- 
rangements led to rapid increases in trade with Western Europe, 
stimulating specialization and improving economic efficiency in 
Finland. 

Finnish business intensified its interest in Western Europe dur- 
ing the mid-1980s and the late 1980s, as falling oil prices led to 
a curtailment in trade with the Soviet Union. In 1986 and 1987, 
the Finns managed to shift trade smoothly from Eastern to Western 
markets, a development that soothed trade worries. Despite this 



209 



Finland: A Country Study 

success, in early 1987 prominent Finns voiced fears that the EC's 
plan to unify its markets by 1992, a plan approved in June 1985, 
might harm Finnish trade interests. According to this line of 
thought, the elimination of the remaining hindrances to trade in 
commodities, the establishment of free markets in services and cap- 
ital, and the further harmonization of European macroeconomic 
policies would favor EC products, reducing Finnish access to EC 
markets. Commentary became especially heated after reports that 
other EFTA states, including Norway and Austria, were considering 
joining the EC, as Portugal had done in 1986. Moreover, the ten- 
dency for EC countries to expand cooperation from economic mat- 
ters to security questions made Finnish membership in the EC 
politically impossible. 

Informed anadysts noted that, as it had in the years after 1957, 
Finland could maintain access to European markets without 
undermining its independent foreign policy. Although deepened 
integration among the EC countries would tend to reduce EC- 
EFTA trade, Finland and the other EFTA countries were not 
defenseless. As a group, the EFTA countries formed the EC's lar- 
gest trading partner and could exert considerable pressure on EC 
harmonization decisions. Indeed, the EC had demonstrated some 
willingness to cooperate with the EFTA countries in April 1984, 
when representatives of the two trading groups issued the Luxem- 
bourg Declaration, which called for reduced technical barriers to 
trade, for common norms in information technology and telecom- 
munications, and for greater cooperation in multilateral research 
and development programs. Even if EFTA efforts lagged, Finland 
could maintain trade ties with the EC by aligning national techni- 
cal norms, commercial practices, and economic policies with those 
chosen by the EC. Other arrangements were also possible. For 
example, in 1986 Finland joined the ESA (which included other 
non-EC countries), participating in the group's earth observation 
satellite program as well as in basic research efforts. In effect, 
expanded technical cooperation offered the prospect that, while 
integration with the EC countries would extend far beyond com- 
mercial agreements during the 1990s, Finland could participate 
without sacrificing political neutrality. 

Finnish-Soviet Cooperation 

Originally established in the chaos of the postwar years, Finnish- 
Soviet economic ties developed apace during the entire postwar 
period as the two countries experimented with new forms of inter- 
action between seemingly incompatible economic systems. Dur- 
ing the Cold War, the two countries found this trade especially 



210 



The Economy 



important. The Soviet Union was Finland's largest trade partner, 
while Finland was the Soviet Union's largest Western client until 
the 1970s; in 1987 Finland still placed third in Soviet trade with 
the West. Although the relative importance of Finnish-Soviet trade 
had declined in the 1980s, the two countries still needed each other's 
business, and they sought to compensate for the setbacks in trade 
by expanding other forms of cooperation. 

Finnish-Soviet trade developed out of interim agreements 
negotiated in the immediate postwar years, especially the 1947 
Treaty of Commerce, in which the Finns and the Soviets agreed 
to expand bilateral trade and to extend to each other most favored 
nation status. During the late 1940s, annual agreements set trade 
targets, but in 1950, with the end of reparations deliveries in sight, 
the two partners agreed on the first of the five-year trade plans that 
continued to regulate trade in the late 1980s. These plans, which 
contained commodity quotas for both imports and exports, cdlowed 
both sides to anticipate deliveries — a plus for Finland's shipbuild- 
ing and other heavy industries. Annual trade protocols, negotiat- 
ed in accordance with the five-year plans, provided a detailed list 
of expected exchanges. Although in the Soviet Union the govern- 
ment traditionally monopolized foreign deal making, in Finland 
private firms were free to negotiate with minimal government in- 
terference. The parties to individual transactions set the terms of 
exchange — including delivery dates and prices — which generally 
reflected world market conditions. A licensing system, covering both 
imports and exports, enforced the planned trade balance. 

The barter arrangements of the early postwar years soon gave 
way to a ruble clearing account jointly administered by the BOF 
and the Soviet Foreign Trade Bank. Under this scheme, individual 
transactions did not need to balance, provided that total trade 
balanced in each five-year period and that payment imbalances did 
not exceed a ceiling of about 5 percent of the annual value of trade. 
Other payment arrangements were developed when needed. Be- 
tween 1956 and 1965, for example, the Soviets made hard-currency 
payments to cover the costs of imported materials in Finnish ship- 
ments to the Soviet Union. In addition, barter still played a role 
in border trade, which was regulated by a special section of the 
annuad trade protocol. 

During the 1960s and 1970s, the two countries further institu- 
tionalized their economic relationship, often as a result of negotia- 
tions initiated from the Finnish side. In 1960 the Finns, invoking 
the most favored nation clause of the 1947 Treaty of Commerce, 
negotiated a free-trade agreement to compensate the Soviet Union 
for the FINEFTA agreement. In 1967 the two states established 



211 



Finland: A Country Study 

the Finnish- Soviet Intergovernmentcd Commission for Economic 
Cooperation, which set the five-year and the annual trade projec- 
tions and studied other forms of cooperation. In 1973, after sign- 
ing a free-trade agreement with the EEC , Finland became the first 
Western nation to reach cin agreement with Comecon; Finland com- 
plemented this agreement with bilateral free-trade treaties with most 
East European Comecon members. Another importaint step toward 
improved ties came in 1977, when Finland and the Soviet Union 
decided on a fifteen-year Long-term Economic Plan meant to 
smooth out trade fluctuations between the five-year plans. 

Despite these elaborate institutional arrangements, prospects for 
expanding Finnish- Soviet trade dimmed after 1986, when falling 
oil prices sharply reduced the Soviet Union's ability to finance im- 
ports from Finland. Soviet consumer goods sold poorly on the Fin- 
nish market, and the Soviets reportedly preferred selling their few 
competitive industrial products in hard-currency markets, mak- 
ing it hard to find substitutes for oil imports. The Finns, long 
unchallenged in Eastern markets, found increased competition from 
other Western exporters. The reform movement initiated by Soviet 
party leader Mikhail S. Gorbachev had both advantages and dis- 
advantages for the Finns. In the long run, increased flexibility and 
new emphasis on consumer goods were likely to improve prospects 
for trade. Finns experienced immediate difficulties, however, when 
Moscow decided to decentralize foreign-trade decision making, 
reducing the importance of long-standing Finnish contacts in the 
Soviet Ministry of Foreign Trade. As a result of these develop- 
ments, analysts predicted that Finnish-Soviet trade might decline 
by as much as 10 percent per year in 1988 and 1989, unless world 
oil prices rose again. 

In the late 1980s, concerns about falling exports to the East filled 
the business press with reports of the difficulties faced by Finnish 
agriculture, textiles, leather goods, and shipbuilding, sectors par- 
ticularly dependent on the Soviet market. Many analysts believed, 
however, that the Finns would find ways to preserve their exch2inges 
with Soviet enterprises. Aware of their common interests, policy 
makers in the two countries addressed immediate problems and 
invented new forms of East- West cooperation. At the end of 1986, 
the Soviets agreed to convert the Finnish surplus on the clearing 
account to a loan paying interest at world rates, with guarantees 
on the ruble's exchange rate. In early 1987, Finland's state petro- 
leum company, Neste, arranged to import increased amounts of 
Soviet oil, which it reexported, sometimes after refining operations. 

In the spring of 1987, a Finnish firm became the first Western 
enterprise to establish a joint venture with Soviet partners by 



212 



The Economy 



investing in an Estonian paint factory. Later, Finnair agreed to 
form a joint venture to renovate and operate a luxury hotel in 
Moscow. The two sides were also exploring compensation projects, 
in which Finnish enterprises would help to build industrial facili- 
ties in the Soviet Union and would accept a share of the resulting 
output as full or partial payment. In March 1988, Moscow 
announced plans to list several Soviet companies on the Helsinki 
Stock Exchange. Thus, although Finnish- Soviet trade might well 
decline in the late 1980s and early 1990s, it appeared likely that 
the Finns would find ways to maintain and to improve the long- 
standing economic relationships with their neighbors in the Soviet 
Union and Eastern Europe. 

* * * 

The OECD's annual economic survey, Finland, most recently 
published in April 1988, is an authoritative and readily available 
summary of the Finnish economy that includes up-to-date statisti- 
cal tables. The Financial Times (published in London) provides regu- 
lar coverage and occasional surveys of Finnish economic and 
business developments. The Economist Intelligence Unit's quar- 
terly Country Report: Finland and annual Country Profile: Finland 
oudine economic and political trends and include up-to-date statisti- 
cal material. The Yearbook of Nordic Statistics, published by the Nordic 
Council of Ministers, provides official economic statistics in a for- 
mat that allows comparison with other Nordic states; the Statistical 
Yearbook of Finland, issued by the Central Statistical Office of Fin- 
land, supplies more detailed statistics, although it is less widely dis- 
tributed. 

No comprehensive survey of the Finnish economy exists in 
English, but a number of publications offer partial views. Finland 
and Its Geography, edited by Raye R. Piatt, although now rather 
dated, offers a geographical introduction to economic affairs. Fred 
Singleton's The Economy of Finland in the Twentieth Century sketches 
the historical background. Dieter Senghass's The European Experience 
and essays by Risto Alapuro, Matti Alestalo, Stein Kuhnle, and 
Kimmo Kiljunen analyze the country's economic development in 
comparative frameworks. David Arter's Politics and Policy-making 
in Finland and Lars Mjoset's "Nordic Economic Policies in the 1970s 
and 1980s" explain the institutional and international influences 
on economic policy making. The Bank of Finland Bulletin offers 
in-depth analytical articles on topics of current interest, and the 
varied publications of Finland's government and of Finnish 
producer groups, generally available from the Embassy of Finland 



213 



Finland: A Country Study 

in Washington, give information about particular sectors. (For fur- 
ther information and complete citations, see Bibliography.) 



214 



Chapter 4. Government and Politics 



I 



1 



I 



Parliament building, Helsinki 



Since the establishment of its present system of govern- 
ment in 1919, Finland has been one of the more fortunate mem- 
bers of the Western community of democratic nations. Compared 
with other European states, the country was only moderately af- 
fected by the political turmoil of the interwar period; it passed 
through World War II relatively unscathed; and, although right 
on the line that divided Europe into two hostile blocs after the second 
half of the 1940s, it survived as an independent nation with its 
democratic institutions intact. 

This enviable record was achieved against formidable odds. 
Although the constitutional basis of their government grew out of 
long-established institutions, Finns had never been fully free to 
govern themselves until late 1917 when they achieved national in- 
dependence. Swedish and Russian rulers had always ultimately 
determined their affairs. Finnish society was also marked by deep 
fissures that became deeper after the brief civil war (1918), which 
left scars that needed several generations to heal. In addition to 
class and political divisions, the country adso had to contend with 
regional and linguistic differences. These problems were eventu- 
ally surmounted, and by the 1980s the watchword in Finnish politics 
was consensus. 

A skillfully constructed system of government cillowed Finns to 
manage their affairs with the participation of all social groups 
(although there were some serious lapses in the interwar period). 
Checks and balances, built into a system of modified separation 
of powers, enabled the government to function democratically and 
protected the basic rights of all citizens. The 200-member parlia- 
ment, the Eduskunta, elected by popular vote, was sovereign by 
virtue of its representing the Finnish people. An elected president 
wielded supreme executive power and determined foreign policy. 
Although not responsible politically to the Eduskunta, the presi- 
dent could carry out many of his functions only through a cabinet 
government, the Council of State, which was dependent upon the 
support of the Eduskunta. An independent judiciary, assisted by 
two legal officials with broad independent powers — the chancellor 
of justice and the parliamentary ombudsman — ensured that govern- 
ment institutions adhered to the law. 

Working within this system during the 1980s were a variety of 
political parties, an average of about a dozen, ranging from sect- 
like groups to large, well-established parties, the counterparts of 



217 



Finland: A Country Study 

which were to be found all over Western Europe. The socialist wing 
consisted of a deeply split communist movement and a moderate 
Finnish Social Democratic Party that by the late 1980s was a pre- 
eminent governing party. The center was occupied by an agrari- 
an party, the Center Party, which had been in government almost 
continuously until 1987; the Swedish People's Party; and a for- 
merly right-wing protest party, the Finnish Rural Party. The right 
was dominated by the National Coalition Party, which was fairly 
moderate in its conservatism. In the 1970s and the 1980s, the main- 
stream parties, and even a good part of the Communist Party of 
Finland, had moved toward the center, and the political spectrum 
as a whole was slightly more to the right than it had been in previ- 
ous decades. 

A constitutional system that was conservative in nature had 
allowed these parties to work together, yet within constraints that 
permitted no single group to usurp the rights of another. Neverthe- 
less, the variety of parties had made it very difficult to put together 
coalitions that could attain the strict qualified majorities needed 
to effect fundamentail changes. Only since the second half of the 
1960s had it been possible, though at times difficult, to find a broad 
multiparty consensus. 

Powerful interest groups were also involved in Finnish politics, 
most noticeably in the negotiation and the realization of biannual 
income policy settlements that, since the late 1960s, had affected 
most Finnish wage-earners. Interest groups initially negotiated the 
terms of a new wage agreement; then it was, in effect, ratified by 
coalitions of parties in government; and finally the Eduskunta 
passed the social and economic legislation that underlay it. Some 
observers complained that government's role had become overly 
passive in this process and that the preeminence of consensus 
actually meant that Finnish politics offered the populace no real 
alternatives. Yet most Finns, remembering earlier years of indus- 
trial strife and poverty, preferred the new means of managing public 
affairs. 

There was also broad agreement about Finnish foreign policy. 
The country was threatened with extinction as an independent 
nation after World War II, but presidents Juho Paasikivi and Urho 
Kekkonen, both masters of realpolitik, led their countrymen to a 
new relationship with the Soviet Union. The core of this relation- 
ship was Finland's guarantee to the Soviet Union that its north- 
western border region was militarily secure. Controversisd as the 
so-called Paasikivi-Kekkonen Line was initially, by the 1980s the 
vast majority of Finns approved of the way Finland dealt with its 



218 



Government and Politics 



large neighbor and were well aware, too, of the trade advantages 
the special relationship had brought to their country. 

Working in tandem with good Finnish-Soviet relations was the 
poUcy of active and peaceful neutrality, the backbone of Finnish 
foreign policy. Advocating, as a neutral state, the settlement of dis- 
putes through peaceful, legal means was a role Finns adopted will- 
ingly. A high point of this policy was the part the country played 
in planning and in hosting the 1975 Conference on Security and 
Cooperation in Europe. Another facet of active neutrality was a 
committed membership in the United Nations, most notably in 
the organization's peacekeeping forces. 

Constitutional Framework 

Finland's government structure has remained largely unchanged 
since it was established in 1919 with the passage of the Constitu- 
tion Act (see The Establishment of Finnish Democracy, ch. 1). 
Building on a combination of old institutions from both the Swed- 
ish and the Russian periods, this law, together with three others 
also of constitutional status, has given Finland a system that has 
been remarkably successful in allowing a once deeply divided na- 
tion to govern itself. 

Constitutional Development 

Finland, adthough independent of foreign rule only since 1917, 
has traditions of self-government extending back into the Middle 
Ages. Because their country belonged to the dual kingdom of 
Sweden-Finland for more than 600 years, Finns had long enjoyed 
the common Nordic right to manage local affairs by themselves. 
Beginning in 1362, Finns took part in the election of the Swedish 
king, and they thus became involved in the government of the realm 
as a whole. This role was increased after 1435, when they began 
sending representatives to the kingdom's governing body, the Diet 
of the Four Estates (Riksdag). 

The Swedish Diet Act of 1 6 1 7 and the Form of Government Act 
of 1634 formalized the Finnish tradition of estates, whereby lead- 
ing members of the country, representatives not only of regions 
but of soci2il classes as well, met to decide matters of common con- 
cern. Although the acts restricted local government somewhat, they 
brought Finns more than ever into the management of the king- 
dom's affairs. At regular intervads a Finn presided over the nobili- 
ty, the most important of the four estates of the Diet; consisting 
also of the estates of the clergy, burghers, and peasantry, the Diet 
continued to be Finland's representative governing body until early 
in the twentieth century. 



219 



Finland: A Country Study 

Royal power was strengthened by the constitution of 1772, forced 
on the Diet by King Gustav III. This constitution, in effect in Fin- 
land until 1919, long after it had been abrogated in Sweden, gave 
the king final say about the decisions of the Diet. The king's power 
was further augmented by the Act of Union and Security of 1789, 
which gave him exclusive initiative in legislative matters. 

Ceded by Sweden to Russia in 1809, Finland was not incorpo- 
rated fully into the empire by Tsar Alexander I, but retained its 
own legal system (see The Russian Grand Duchy of Finland, 
1809-1917, ch. 1). A small body, the Senate, was established to 
administer the country. Its two sections, finsince and justice, later 
became the basis of independent Finland's cabinet and supreme 
courts. The Senate's head, the governor general, the highest offi- 
cial in Finland, was a Russian appointed by the tsar. An indica- 
tion of the country's relative autonomy, however, was that all other 
officiads of the Grand Duchy of Finland were native Finns. 

The tsar, who had the right to determine when the Diet met, 
dissolved the assembly in 1809, and it did not meet again until 1863 
when reccdled by Alexander II, the Tsar Liberator. Thereafter the 
Diet met regularly, and in the late 1860s it ushered in the "Gold- 
en Age" of Finnish legislation, a period of several decades during 
which the country's laws were modernized and were brought into 
harmony with the legal codes of Western Europe. It was during 
this period, too, that political parties appeared, emerging first from 
the campaign to give the Finnish language its rightful place in the 
country, then from the growing resistance to Russian rule, and 
fincJly from the question of how to contend with the coming of 
industrialization and labor strife. 

The aggressive Russification campaign that began in the 1890s 
sought to end the relative autonomy Finland had enjoyed under 
tsarist rule (see The Era of Russification, ch. 1). A military defeat 
in East Asia weakened the Russian empire and gave Finns a chance 
for greater freedom. The Diet unanimously dissolved itself in 1906, 
and a parliament, the Eduskunta, a unicamercd body elected by 
universcd suffrage, was created. Finland became in one step a 
modern representative democracy and the first European nation 
to grant women the right to vote. 

The tsarist regime allowed the assembly few of its rights, however, 
and only after the collapse of the Russian Empire and the Bolshe- 
vik Revolution of 1917 were the Finns able to secure their indepen- 
dence. A civil war and bitter political debates about whether the 
country should be a monarchy or a republic preceded the passage 
of the Constitution Act of 1919, which established the present sys- 
tem of government in Finland. 



220 



Government and Politics 



The Constitution 

Finland's Constitution is not a single law, but rather a collec- 
tion of four laws that have constitutional status. The most impor- 
tant is the Constitution Act of 1919, which lays out the functions 
and relationships of the most important government entities, lists 
the basic rights of Finnish citizens and the legal institutions charged 
with their protection, and makes provisions for managing state 
finances and for organizing the defense forces and public offices. 
The second of the basic laws is the Parliament Act of 1928, a slightly 
modernized version of the Parliament Act of 1906, which estab- 
lished the country's democratically elected parliament, the Eduskun- 
ta, and spelled out its procedures. Two other basic laws date from 
1922 and involve supervision of the cabinet or government: the 
Responsibility of Ministers Act, which details the legal responsi- 
bilities of the members of the cabinet and the chancellor of justice; 
and the High Court of Impeachment Act, which explains how they 
are to be made accountable for infractions of the law. 

Two acts dealing with the self-determination of the Aland Islands 
also have constitutional status (see fig. 1). The Autonomy Act of 
1951 protects the Swedish character of the archipelago, and a law 
of 1975 restricts the purchase and ownership of land on the islands. 

The Constitution Act of 1919, building on existing Finnish 
institutions, established a parliamentary system of government 
based on a division of powers among the legislative, the executive, 
and the judicial branches of government. But the separation of pow- 
ers is not complete, and the branches' powers and functions are 
overlapping and interlocking. Sovereign power rests with the Fin- 
nish people, who govern themselves through the Eduskunta. Shar- 
ing legislative power with the parliament, however, is a president, 
who also wields supreme executive power. He exercises this power 
through the Council of State, a cabinet of ministers. In accordance 
with parliamentary norms, this cabinet must resign if it loses the 
support of the Eduskunta. The judiciary is independent, yet it is 
bound by the laws passed by the Eduskunta, which, in turn, fol- 
lows constitutional norms in drafting them. 

Like other Nordic countries, Finland has no constitutional court. 
The Eduskunta, acting through its Constitutional Committee, 
serves as the ultimate arbiter of the constitutionality of a law or 
legislative proposal. Composed of seventeen members, chosen to 
represent the party composition of the full chamber, the commit- 
tee seeks expert opinion and lets itself be bound by legal precedents. 

The Constitution may be amended if proposals to this end meet 
qualified or set majority requirements. The requirements are such 



221 



Finland: A Country Study 



that as few as one-sixth of the Eduskunta's members can prevent 
the passage of amendments. The large number of Finnish poUti- 
cal parties makes attaining qualified majorities nearly impossible, 
unless an amendment has widespread support. This protects the 
rights of minorities. 

The individual rights of Finnish citizens are delineated in Sec- 
tion II of the Constitution Act, Article 5 through Article 16, and, 
with a single addition, they have remained unchanged since their 
adoption in 1919. The additional amendment, enacted in 1972, 
promises cdl Finns the opportunity for gainful employment, to be 
provided by the state if necessary. The list of rights is, of necessity, 
rather general. How they are exercised, protected, and limited is 
set out in ordinary laws. The state reserves for itself the right to 
limit them "in time of war or rebellion." 

First and foremost, all citizens are equal under the law, with a 
constitutional guarantee of their rights to life, honor, personal free- 
dom, and property. The reference to honor provides for protec- 
tion against false and slanderous charges and reflects the importance 
of reputation in Finnish tradition. The protection of property and 
the requirement for full compensation if it is expropriated for public 
needs indicate the conservative nature of the Finnish Constitution. 
The right of freedom of movement encompasses residence, pro- 
tection from deportation, and guaranteed readmittance into Fin- 
land. Only in special cases, such as convictions for criminal activity, 
are these freedoms abridged. Complete freedom of religious wor- 
ship and association is guaranteed, as is freedom from religion. 

Finnish citizens are guaranteed free speech and the right of 
assembly, as well as the right to publish uncensored texts or pic- 
tures. The inviolability of the home is promised, and a domicile 
can be searched only according to conditions set by law. Privacy 
of communications by mail, telegraph, or telephone is likewise 
provided for. A Finn may be tried only in a court having prescribed 
jurisdiction over him. The safeguarding of the cultural affinities 
of the country's citizens is regarded as a fundamental right, and, 
as a consequence, the two languages spoken by native-born Finns, 
Finnish and Swedish, both enjoy the status of official language. 
The act stipulates that a Finn may use either of these two languages 
in a court of law and may obtain in that language all pertinent 
legal or official documents. Finally, in accordance with its nature 
as a republic, Finland grants no noble or hereditary titles. 

Governmental Institutions 

The four acts that make up the Finnish Constitution provide for 



222 



Government and Politics 



a central government divided into three overlapping branches — 
legislative, executive, and judicial (see fig. 19). Their mutual con- 
trol by an elaborate system of checks and balances has permitted 
Finnish democracy to flourish. Decisions of the central government 
are implemented by ministries, semiautonomous national boards, 
and governments at the provincial and the local levels. Finnish local 
government is comparatively extensive, has broader powers than 
that of many other countries, and, in accordance with the Consti- 
tution, is self-governing. An efficient, but somewhat politicized, 
civil service staffs these governmental structures. Underpinning the 
system is an electoral system that permits the Finnish people to 
determine their own affairs in a democratic way. One region of 
the country, the Aland Islands, is to a degree autonomous, a reflec- 
tion both of its unique linguistic heritage and the respect for 
individual freedom embedded in the Finnish system of government. 

Legislature 

The Eduskunta is the country's highest governing body by vir- 
tue of its representing the people, who possess sovereign power. 
Its main power is legislative, a power it shares with the country's 
president. It also has extensive financial powers, and its approval 
is required for the government's annual budget and for any loans 
the government wants to contract. Although the president is 
dominant in the area of foreign policy, treaties must be ratified 
by the Eduskunta, and only with its consent can the country go 
to war or make peace. This chamber also has supervisory powers, 
and it is charged with seeing that the country is governed in accor- 
dance with the laws it has passed. To enforce its will, the Eduskunta 
has the power to hold the government to account, and to call for 
the impeachment of the president. 

The Eduskunta is closely tied to the president and to the Coun- 
cil of State. Neither the president nor the cabinet is able to carry 
out many executive ftmctions without the support of the Eduskunta, 
and the cabinet must resign if it is shown that it has lost the cham- 
ber's confidence. Strong links between the Eduskunta and the 
Council of State result, too, from the circumstance that most cabi- 
net ministers are members of parliament. On the other hand, the 
Eduskunta is subordinate to the president in that he may dissolve 
it and call for new elections. Despite its legislative powers, it actu- 
ally initiates little legislation, limiting itself mainly to examining 
the government bills submitted to it by the president and the council. 
In addition, all legislation passed by the Eduskunta must bear the 
president's signature and that of a responsible minister in order 
to go into effect. The Eduskunta need not approve the legislative 



223 



Finland: A Country Study 




224 



Government and Politics 



proposals submitted to it, however, and can alter or reject them. 

As stipulated by the Parliament Act of 1928, the Eduskunta's 
200 members are elected by universal suffrage for four-year terms. 
All citizens twenty years of age and older, who are able to vote, 
and who are not professional military personnel or holders of cer- 
tain high offices, have the right to serve in the Eduskunta. A wide 
variety of the country's population has served in this body, and 
its membership has changed often. Sometimes as many as one-third 
of the representatives have been first-term members, as occurred 
in the 1987 national elections. 

Finnish election laws emphasize individual candidates, which 
sometimes has meant the election of celebrities to the body. Most 
members, however, have begun their political careers at the local 
level. In the late 1980s, about one-third of the representatives were 
career politicians. The professions were overly represented at the 
expense of blue-collar workers; about 40 percent of the members, 
compared with only 3 percent of the population as a whole, had 
university degrees. By the 1980s, farmers and businessmen were 
no longer so prevalent as they once had been, while there were 
more journalists and managers. The number of female represen- 
tatives had also increased, and by the 1980s they made up one- 
third of the chamber. In the 1987 election, women won 63 of the 
200 seats. 

Article 11 of the 1928 Parliament Act states that members are 
to vote as their consciences dictate. A delegate is not legally bound 
to vote as he or she promised, in a campaign for example. In the 
late 1980s, however, party discipline was strict, and delegates usually 
voted as directed by their party. 

The four-year term, or legislative period, of the Eduskunta is 
divided into annual sessions beginning in early February, with va- 
cation breaks in the summer and at Christmas. The first business 
of a yearly session is the election of a speaker, two deputy speak- 
ers, and committee chairmen. Those elected make up the speak- 
er's council, which is representative of the party composition of 
the Eduskunta and arranges its work schedule. The speaker, by 
tradition of a different party from the prime minister, presides over 
the chamber, but the speaker neither debates nor votes. 

Also chosen in the first days of a new session are those, from 
either within or outside the parliament, who supervise the pension 
institute and television and radio broadcasting; and five auditors 
who monitor compliance with the government's budget and over- 
see the Bank of Finland (BOF). Among the most important posts 
to be filled by the Eduskunta for its four-year term are those of 



225 



Finland: A Country Study 

the parliamentary ombudsman and the six members of the 
Eduskunta who make up half of the High Court of Impeachment. 

Parliament approves legislation in plenary sittings, but it is in 
the committees that government bills are closely examined. In the 
late 1980s, there were thirteen committees in all: five permanent 
committees — constitutional, legal affairs, foreign affairs, finance, 
and bank — and eight regular ad hoc committees — economy, law 
and economy, cultural affairs, agriculture and forestry, social affairs, 
transportation, defense, and second legal affairs. Committee mem- 
bership reflects the political composition of the Eduskunta. Mem- 
bers usually serve for the whole legislative period, and they 
commonly have seats on several committees, often of their own 
choosing. Members who have served on a given committee for a 
number of terms often develop considerable expertise in its area 
of responsibility. 

Legislative proposals also pass through the forty-five-member 
Grand Committee. Only the budget, which is not a legislative 
proposal in Finland, escapes its review. The committee, adopted 
as a compromise in 1 906 between those who advocated a bicameral 
legislature and those who preferred the unicameral body finally 
established, was conceived as a safeguard against the measures of 
a perhaps too radical parliament. It therefore examines proposals 
for their legal soundness and propriety. Yet, according to the British 
scholar David Arter, the Grand Committee has only occasionally 
altered the proposals sent to it, and, as a consequence, it has lost 
prestige within the Eduskunta. Its members are generally newly 
elected representatives. 

The Eduskunta has an elaborate procedure for handling govern- 
ment bills sent to it by the president, after discussion and approval 
in the Council of State. This procedure was adopted with the idea 
of preventing the enactment of radical measures, and it is an indi- 
cation of the Eduskunta' s essentially conservative nature. Proposals 
are usually first discussed in a plenary session, then directed by 
the speaker to an appropriate committee, where they are carefully 
scrutinized in closed hearings. After committee review and report, 
proposals are returned to the plenary session for the first reading, 
where they are discussed but no vote is taken. The next step is the 
Grand Committee review. Working from the Grand Committee 
report, the second reading in plenary session is a detailed exami- 
nation of the proposal. If the Grand Committee report is not 
accepted in its entirety, the proposal must be returned to the Grand 
Committee for further discussion. Once the proposal is back again 
at the plenary session, for the so-called continued second reading, 
the Eduskunta votes on the changes recommended by the Grand 



226 



Government and Politics 



Committee. There is no discussion in the fmal and third reading; 
the proposal is simply approved or rejected. Votes may be taken 
at least three days after the second reading or the continued second 
reading. Once approved by the Eduskunta, bills require the sig- 
nature of the president within three months to go into effect. This 
requirement gives the president the power of suspensive veto. This 
veto, rarely used, can be overridden if the Eduskunta approves the 
bill with a simple majority following new national elections. 

Only the government's budget proposal is exempted from the 
above parliamentary procedure, because the budget is not consid- 
ered a legislative proposal in Finland. Instead, the budget proposal 
is handled in a single reading, after a close review by the largest 
and busiest parliamentary committee, the twenty-one-member 
Finance Committee. Government bills connected with the budget 
and involving taxation, however, must pass through the three ple- 
nary session readings and the Grand Committee review. This rein- 
forces the Eduskunta' s budgetary control. 

The Eduskunta' s elaborate legislative procedure can be traversed 
in a few days if there is broad agreement about the content of a 
bill. Qualified majority requirements for much legislation, most 
commonly that touching on financial matters and property rights, 
enable a small number of representatives to stop ratification in a 
plenary session and to oblige the government to ascertain a bill's 
probable parliamentary support before submitting it to the 
Eduskunta. Qualified majority requirements for legislation involv- 
ing taxation for a period of more than one year require the approval 
of two-thirds of the body. Sixty-seven members can hold such legis- 
lation over until after a new election and can thus effectively brake 
government programs. Because there is no time limit on a mem- 
ber's right to speak, filibusters can also slow the progress of a bill 
through the Eduskunta, although this tactic has seldom been 
employed. Government care in the crafting of bills is reflected in 
the unimpeded passage through parliament of most of them. 

Legislation altering the Constitution is subjected to more rig- 
orous requirements. Constitutional changes may be approved by 
a simple majority, but before they go into effect, they must be 
approved again by a two-thirds majority in a newly elected 
Eduskunta. If the changes are to go into effect within the lifetime 
of a single Eduskunta, the legislation implementing them must be 
declared "urgent" by five-sixths of the body and, in a subsequent 
vote, approved by a two- thirds majority. This requirement means 
that a vote of one-sixth against a proposed economic measure 
regarded as being of a constitutional nature, such as some incomes 
policy legislation, can prevent its enactment during a single 



227 



Finland: A Country Study 

parliamentary term. These same majorities are required for an 
unusual feature of Finnish parliamentary procedure that permits 
the passage of laws that are temporary suspensions of, or excep- 
tions to, the Constitution, but that leave it intact. Since 1919 about 
800 of these exceptional laws have been passed, most involving only 
trivial deviations from the Constitution. 

Members of the Eduskunta may initiate legislation by submit- 
ting their own private members' bills and financial motions relat- 
ing to the budget. Several thousand of these are submitted each 
year, but 95 percent are not even considered, and only a handful 
are accepted. Members also may submit proposals connected to 
government bills, or may petition for certain actions to be taken. 
The main point of these procedures is often a delegate's desire to 
win the approval of his constituents by bringing up an issue in the 
Eduskunta. 

The Eduskunta has other means of exerting pressure on the 
government, in addition to refusing to approve its legislative 
proposals. Its members may address questions to ministers either 
orally or in writing, and in either case a quick response is required. 
Potentially much more serious is an interpellation, possible if twenty 
members desire it, in which case the government can fall if it fails 
to survive a vote of confidence. Few governments fall in this way, 
however, as they are allowed to remain in power as long as a lack 
of support is not shown. Interpellations have been used principally 
as a means of drawing attention to a particular question, and press 
coverage usually is intense. 

An important instrument of Finnish parliamentary control is the 
right and duty of the Constitutional Committee to exaimine govern- 
ment bills with regard to their constitutionality. Finland has no 
constitutional court, and suggestions for its establishment have foun- 
dered because the Eduskunta has refused to cede this important 
review power to a court that would be outside parliamentary con- 
trol. Although the committee's seventeen members come from par- 
ties with seats in the Eduskunta, the committee has strived for 
impartiality, has sought the opinions of legal specialists, and has 
let itself be bound by precedents. As evidence that it takes its respon- 
sibilities seriously, committee members representing both the far 
left and the far right have agreed with 80 percent of its judgements 
over a long period of time. 

The Eduskunta also exercises control of the executive through 
the Responsibility of Ministers Act, which can be used against 
the government or an individual minister if a parliamentary 
committee, the parliamentary ombudsman, or five members of 
the Eduskunta so decide. The Eduskunta' s ability to control the 



228 



The Eduskunta, Finland's parliament, in session 
Courtesy Embassy of Finland, Washington 

government is also apparent in its duty to comment on the annual 
report of the government's actions submitted in May, and the For- 
eign Affairs Committee's review of the frequent Ministry of For- 
eign Affairs reports detailing the government's conduct in the field 
of foreign relations. 

President 

Supreme executive power is held by the president, assisted by 
the Council of State. The president also has legislative power 
exercised in conjunction with the Eduskunta. As of 1988, the presi- 
dent is to be elected for a six-year term either directly by the Fin- 
nish people or, if an absolute majority is not reached, by a college 
of 301 electors selected in the same election. Previously the presi- 
dent was elected indirectly by the college of electors. 

As of 1988, there was no limit on the number of terms a presi- 
dent might serve, but in the late 1980s legislation was being dis- 
cussed that would permit no one to serve more than two consecu- 
tive terms. The president's only formal qualification is that he or 
she be a native-born citizen. Once elected, the president must 
renounce all other offices, and, with the aim of being a nonparti- 
san head of state, must cease being a member of any political party. 
His election, separate from that for the Eduskunta, gives him a 
distinct mandate that theoretically elevates him above routine 



229 



Finland: A Country Study 

politics. Another advantage of his long term in office is that it brings 
to Finnish political life a continuity that it has often lacked. 

The president is not politically responsible to anyone. He can 
be removed from office only if the Eduskunta decides by a three- 
quarters majority that he is guilty of treason. He would then be 
tried by the Supreme Court (see Legal System, this ch.). The risks 
that such freedom from political responsibility entails are lessened 
because most of his executive decisions can be carried out only by 
means of the Council of State, and his legislative powers are real- 
ized through the Eduskunta. 

The president's power to dissolve parliament and to call for new 
elections gives him, in theory, considerable influence over parlia- 
ment, but ultimately he must work with an Eduskunta elected by 
the people. If he cannot convince a majority of the voters or the 
members of the Eduskunta to support his policies, he cannot act. 
An indication of the importance of this central element in Finnish 
parliamentary practice is that the Eduskunta has been dissolved 
only once — in 1924 — against its will. The other half dozen disso- 
lutions were caused by the inability of the government to agree 
on a common course of action. 

It is the president who decides what legislative proposals are sent 
to the Eduskunta, although in practice government bills are drafted 
by the Council of State and are sent to parliament after presiden- 
tial approval. Failure to sign them within three months of their 
passage amounts to a suspensive veto on the part of the president, 
a veto which can be overridden by a simple majority of the 
Eduskunta after new parliamentary elections. Both the presiden- 
tial veto and the Eduskunta override have been rare occurrences. 

Another important presidential power involves the formation of 
new governments. The president has the formal power to nominate 
ministers, but his choices are bound by what the parties seated in 
the Eduskunta will accept. His choices must correspond to the cham- 
ber's political composition. Within these limits, though, the presi- 
dent's force of character and political will influence the formation 
of a government. The president also has the right to dismiss 
ministers, either individual ministers, or, if he wishes, the entire 
cabinet. The president may issue decrees about details of public 
administration, as long as these measures are not contrary to laws 
passed by the Eduskunta. The right to change laws is a parliamen- 
tary prerogative, although an emergency law may grant the presi- 
dent this power in times of crisis, as was done in World War II. 

The president nominates all senior civil servants, high judges, 
provincial governors, diplomats, professors at the University of Hel- 
sinki, high churchmen, and the chancellor of justice. In making 



230 



Government and Politics 



these appointments, however, the president rarely departs from 
the names suggested to him by appropriate authorities. As com- 
mander in chief of the armed forces, a position he may delegate 
during wartime, as was done in World War II, the president also 
nominates military officers. 

The president has the power to grant pardons and general 
amnesties, but the latter require the approval of the Eduskunta. 
Individual immunity may also be granted by the president, in 
accordance with certain provisions of the law. Moreover, the grant- 
ing and the revocation of citizenship require the signature of the 
head of state. 

The Constitution Act gives the president the responsibility for 
directing foreign affairs, and his authority in this area has grown 
markedly since World War II. The occasion for the decisive shift 
of presidential activity from principally domestic concerns to for- 
eign relations was the threat a changing world order posed for Fin- 
land 's survival; the crucial roles, played by President Paasikivi in 
formulating a new foreign policy and by President Kekkonen in 
consolidating it, restructured the office they held. Their success 
increased the prestige and the strength of the presidency beyond 
the formal powers already prescribed by the Constitution and 
enhanced the president's role as head of state. 

By the late 1980s, however, a long period of stability both at 
home and abroad made the security and the direction provided 
by a strong and authoritative president seem less essential for the 
country's well-being, and there was serious discussion about limiting 
his power of intervention in the political process. Legislation was 
being prepared that would circumscribe his right to dissolve the 
Eduskunta and his role in the formation of governments; in the 
latter case, he would be required to take greater cognizance of the 
wishes of leading politicians. Other reforms likely to be realized 
in the next decade included curtailing the president's right to dis- 
miss ministers, abolishing the 301 -member college of electors, and 
limiting the president to two consecutive terms in office. Mauno 
Koivisto, first elected president in 1982 and reelected in 1988, sup- 
ported reducing the tradition2d powers of the presidency (see The 
Presidential Election of 1982 and Koivisto 's Presidency, this ch.). 
Observers held that these reforms would augment the governing 
roles of the prime minister, the cabinet, and the legislature and 
that they would mean that Finnish political practices came to re- 
semble more closely those of other West European parliamentary 
democracies. 



231 



Finland: A Country Study 

Council of State 

The Council of State shares executive power with the president, 
and it is responsible for the management of the governmental 
machinery. The Council of State prepares the government bills 
presented to the Eduskunta and authors most legislation. In the 
late 1980s, it consisted of the prime minister, the chancellor of 
justice, and up to seventeen ministers who directed twelve minis- 
tries: foreign affairs, justice, interior, defense, finance, education, 
agriculture and forestry, communications, trade 2ind industry, social 
affairs and health, labor, and environment. Some of the ministries 
have second or deputy ministers, cind occasionally a minister holds 
two portfolios. There have been no ministers without portfolio since 
the early 1950s. Ministers must be "native-born Finnish citizens 
known for their honesty and ability." The minister of justice and 
one other minister must be lawyers, but otherwise there are no for- 
mal quailiflcations for a cabinet post. Ministers generally enter the 
cabinet from the Eduskunta, but it has not been uncommon for 
them to be drawn from the outside, especigdly to serve in caretaker 
governments composed largely of leading private citizens and civil 
servants. Even prime ministers have on occasion come from out- 
side parliament, as did Mauno Koivisto in 1979. Ministers from 
the Eduskunta may continue to be members of that body, but they 
may not serve on any committee. 

The prime minister heads the Council of State, sets its agenda, 
nominates some members of the council's committees, settles tie 
votes, and, most important, dissolves it when he sees fit or if it can 
no longer govern. The prime minister also represents the presi- 
dent when he is out of the country. If the president can no longer 
carry out his duties, the prime minister replaces him until a new 
presidential election can be held. Other than these rights and duties, 
a prime minister in the 1980s had few formal powers and had only 
a very small staff to assist him in his work. His main responsibility 
was holding together cabinets composed of a number of politiccil 
parties that frequently had opposing views on central issues. He 
could manage this through personal prestige or by force of charac- 
ter, through backstairs wrangling, or, ultimately, by threatening to 
dissolve the cabinet if it did not adhere to the government's 
program. 

A key member of the Council of State, although he is not a minis- 
ter, is the chancellor of justice. Appointed for life by the president, 
he is obliged to attend all meetings of the council and to review 
its proceedings for legsdity. He has no vote, but his decisions about 
the legality of council proposals and decisions are regarded as 



232 



Government and Politics 



binding. The chancellor of justice also reviews the president's 
actions, and he reports infractions to the Council of State, or, if 
necessary, to the Eduskunta. He is also empowered to initiate 
proceedings according to the Responsibility of Ministers Act. One 
of the formal qualifications for his position is that he be well versed 
in the law; and within the country's legal system he is the highest 
prosecutor (see Legal System, this ch.). 

The Council of State must enjoy the confidence of the Eduskunta 
in order to govern. The party composition of a new cabinet has 
to be acceptable to the Eduskunta, and it must correspond, to some 
degree, to the relative political strength of the parties within the 
chamber. Formation of a cabinet has often been difficult because, 
in addition to the large number of parties that participate in them, 
Finnish elections usually give no clear indication of how politicsd 
realities should be reflected by a governing coalition. Even the selec- 
tion of individual ministers can be troublesome, because the par- 
ties themselves have much to say about who serves as minister, 
and even a prime minister may have to accept members of his own 
party not of his choosing. If a suitable constellation of parties can- 
not be formed to yield an effective majority government, a minority 
government, or even a caretaker government, may be put together 
if the Eduskunta agrees. 

The Council of State is held legally responsible for the acts of 
its ministers, in accordance with the Responsibility of Minis cers 
Act of 1922. In addition to making ministers accountable for their 
official actions, this law — which has constitutional status — is also 
a vital, if indirect, means of controlling the president's actions. 
Because many of his decisions can be carried out only through the 
Council of State, ministers who approve an illegal presidential action 
are liable under the terms of this law. Ministers wishing to avoid 
the law's sanctions must refuse to be party to a presidential deci- 
sion that they view as illegal. If ministerial consent is lacking, the 
president cannot act. In such a case, the president must either abide 
by the decision of the council or dismiss it and attempt to form 
a new one amenable to his wishes. If this is not possible, he may 
dissolve the Eduskunta and call for new elections with the hope 
of having the voters endorse his decisions by returning an Eduskunta 
from which a compliant government can be formed. If the council 
refuses to approve a lawful presidential decision, it is obliged to 
resign. Ministers can always resign individually, but the resigna- 
tion of the prime minister means the end of a government. 

A principal task of the Council of State is the preparation of legis- 
lative proposals, or government bills, that the president presents 



233 



Finland: A Country Study 

to the Eduskunta for ratification. Most of this work is done in an 
appropriate ministry, where, in addition to ministry personnel and 
civil servants, permanent and ad hoc commissions of experts and 
spokesmen for special interests can be consulted. 

In the 1980s, the Council of State had three committees to han- 
dle important questions: the ministerial committees for finance, 
economic policy, and foreign affairs. The Finance Committee, 
meeting on Wednesdays, consisted of the prime minister, finance 
minister, and several other ministers. It prepared the government's 
budget and responded to the financial motions presented by in- 
dividual members of the Eduskunta. The Economic Policy Com- 
mittee met twice a week to discuss issues touching the country's 
economic life as a whole, broader questions about the government's 
budget, and other financial concerns suggested by the prime 
minister. The Foreign Affairs Committee, least important of the 
three, met when needed to discuss issues concerning foreign policy. 

Plenary meetings of the Council of State, for which a quorum 
of five was required, had three forms. The so-called Evening School 
meeting, on Wednesday evenings, was a closed, informal session 
where ministers, top civil servants, politicians, and leading figures 
from outside government freely discussed decisions to be taken. 
It was thus a forum where the country's leaders met and exchanged 
opinions on important issues. Instituted in the late 1930s as a means 
of speeding the council's work, the Evening School had no formal 
decision-making power. Votes were taken at the Thursday meet- 
ing. The Council of State worked as a collegial body, and unani- 
mous votes were not required. In case of a tie vote, the vote of 
the prime minister was decisive. Approved measures were presented 
to the president for signing at the Friday Presidential Meeting. 

In accordance with its executive powers, the Council of State 
implemented its decisions and directed the ministries and the lower 
levels of the state administrative apparatus. This was done through 
presidential decrees and its own ordinances, neither of which could 
conflict with legislation passed by the Eduskunta. Ministers, aided 
by political secretaries drawn from their own parties, headed the 
country's twelve ministries. The ministries, which both formulated 
and administered policy, oversaw about eighty central boards that 
were wholly occupied with implementing policy. The central board 
system, inherited from the time of Swedish rule, had grown con- 
siderably, expanding by about one-third between 1966 and 1975 
because of the increase in state social services. The boards, such 
as the National Board of General Education and the State Pub- 
lishing Office, did much of the state's work. By tradition some- 
what autonomous, they decided how legislation and ministerial 
decisions were to be carried out. 



234 



Helsinki's neo-classical quarter includes the Government Palace, seen in the 
foreground. This building was constructed as the Senate House and 
was the seat of government during most of the tsarist period. After 
independence, it became the seat of the Council of State. 

Courtesy Embassy of Finland, Washington 

Legal System 

The leg2il system originated during the period of Swedish rule, 
and portions of the Swedish General Code of 1734 were extant in 
Finnish law even in the late 1980s. The country's first court of 
appeals was established at Turku in 1634. The modern division 
of the Finnish courts into two main branches — general courts, deal- 
ing with civil suits and criminal cases, and administrative courts, 
regulating the actions of the country's bureaucracy — also dates from 
this time. This division was formalized in 1918 when two sections 
of the Senate, the body that had governed Finland during the period 
of Russian rule, became the newly independent country's two 
highest courts. The Senate Department of Justice became the 
Supreme Court, and part of the Senate Finance Department was 
the basis of the Supreme Administrative Court. The two court sys- 
tems are entirely separate, and they have no jurisdiction over one 
another. The establishment of the two courts was confirmed by 
the Constitution Act of 1919. Overseeing the system of justice are 
the chancellor of justice — the country's highest guardicin of the law 
and its chief prosecutor — and the parliamentary ombudsman. 



235 



Finland: A Country Study 

Although these two officials have largely parallel functions and each 
is required to submit an annual report of his activities to parlia- 
ment, the former is appointed for life by the president and is a mem- 
ber of the Council of State, whereas the latter is chosen for a 
four-year term by the Eduskunta. Both officials receive complaints 
from citizens about the conduct of civil servants, and on their own 
may investigate all public officials and may order prosecutors to 
proceed against them. The chancellor of justice supervises public 
prosecutors, and he also has the unrestricted right to investigate 
private persons. Both officials may call on either of the high courts 
for assistance. 

The High Court of Impeachment may be convened for cases 
dealing with illegzd official acts by cabinet ministers, judges of the 
two supreme courts, or the chancellor of justice. Members of this 
court, used only three times since its formation in 1922, are the 
chief judges of the two supreme courts and the six courts of appeal, 
a professor of law from the University of Helsinki, and six represen- 
tatives from the Eduskunta. 

As in the other countries of Nordic Europe, there is no constitu- 
tional court. Issues dealt with by a court of this kind elsewhere are 
handled by the Eduskunta' s Constitutioncd Committee (see Legis- 
lature, this ch.). 

According to Article 5 of the Constitution Act, all Finns are equal 
before the law, and Article 13 of the same act stipulates that they 
may be tried only in a court of their own jurisdiction. No tem- 
porary courts are permitted. Legislation passed in 1973 provides 
for free legal assistance to those in need as well as for free court 
proceedings in a number of courts. Trials in lower courts are usually 
open to the public. Records of trials in higher courts are made 
public. 

Judges are appointed for life, with retirement set at age seventy, 
and they may be removed only for serious cause. With the excep- 
tion of some lay judges in circuit courts and in some town courts, 
all judges hold legal degrees from one of the country's three law 
schools. The judiciary in the late 1980s was a rather closed profes- 
sion, and only judges for administrative courts were occasionally 
selected from outside its ranks. 

Defendants have no obligation to employ an attorney for their 
defense in a Finnish court, and may represent themselves or be 
represented by another layman rather than by a lawyer. Neverthe- 
less, in most cases heard in general courts and in many argued 
in administrative courts, trained legcil specialists are employed. 

The general court system handles criminal cases and civil suits 
and has three levels: lower courts, courts of appeal, and the 



236 



Government and Politics 



Supreme Court. There are two kinds of lower courts: town courts, 
numbering 30 in the entire country; and circuit courts, totaUng 
147 in 71 judicial districts. Town courts consist of three judges, 
2dl trained professionals except in some small towns. One of these 
judges is the chief judge chosen by the Supreme Court; the others 
are selected by local authorities. Decisions are made on a collegicd 
basis. Circuit courts consist of a judge, chosen by the Supreme 
Court, and five to seven lay judges, i.e., persons without legal train- 
ing, chosen by local authorities for a term of four years. Decisions 
on cases in courts of this type are made by the professional judge, 
unless he is overruled by the unanimous vote of the lay members 
of the court. Larger cities also have housing courts that deal with 
rent and accommodations. 

Appeals from lower courts are addressed to the six courts of ap- 
peal located at Helsinki, Turku, Vaasa, Kouvola, Kuopio, and 
Rovaniemi. Most cases at these courts are heard by professional 
three-judge panels; more important cases are tried before a ple- 
nary session of judges if the chief judge so decides. In cases involving 
senior government officials, a court of appeals may serve as the 
court of first instance. Judges of the courts of appe2d are appointed 
by the Supreme Court. 

The Supreme Court, located in Helsinki, consists of a chief 
justice, or a president, and twenty-one judges usually working in 
five-judge panels. It hears cases involving appeals of decisions of 
appellate courts where serious errors are alleged to have occurred, 
or where important precedents might be involved. A sentence from 
a court of appeals may go into effect immediately, despite an appeal 
to the Supreme Court, but it may be postponed while the case is 
pending if the Supreme Court so decides. The chief justice of the 
Supreme Court is appointed by the nation's president, and the other 
judges of that court are appointed by the president on the recom- 
mendation of the Supreme Court. 

The administrative courts system consists of twelve county courts, 
one in each of the country's twelve provinces, and the Supreme 
Administrative Court, located in Helsinki. All judges in adminis- 
trative courts are professionals, appointed in the same manner as 
judges who sit in general courts. Judges work in three-judge panels 
at the provincial level and in five-judge panels in the Supreme 
Administrative Court. When appropriate, the latter meets in ple- 
nary sessions to hear especisdly important cases. 

Administrative courts deal with appeals against administrative 
decisions by government agencies, adthough in some cases appeals 
are directed to higher administrative levels within the government. 
About 80 percent of the cases of the county courts involve appecds 



237 



Finland: A Country Study 

of government tax decisions; the remainder deal with questions 
relating to construction, welfare, planning, and local government. 
The Supreme Administrative Court handles appeals of county court 
and central government board decisions that affect, or are affected 
by, administrative law. About 50 percent of the cases heard in the 
Supreme Administrative Court involve questions about taxes. 

Finland also has special courts to handle civil cases; some of these 
courts render judgments from which there is no appeal. The four 
land courts settle disputes about the division of land, and their 
decisions may be appealed to the Supreme Court. Appeals from 
the insurance court, which handles social insurance cases, also may 
be appealed to the Supreme Court. Cases that involve water use 
are dealt with in the three water courts, and may be appealed first 
to the water court of appeals and from there to the Supreme Court. 
If the case involves water permits, appeals go to the Supreme 
Administrative Court. Decisions of the labor court and the mar- 
keting court may not be appealed. The former treats disputes about 
collective bargaining agreements in either the public or the 
private sector. Its president and vice president are lawyers; its 
remaining members come from groups representing labor and 
management. The marketing court regulates disagreements about 
consumer protection and unfair competition. 

Civil Service 

Article 84 of the Constitution Act stipulates that only Finnish 
citizens may be appointed to the civil service, although exceptions 
may be made for some technical and teaching positions. Article 
85 states that educational requirements for the civil service wiU be 
set by law or statute, and that only on special grounds may the 
Council of State make an exception to the set requirements. 
Exceptions of this type seldom occur. No exceptions may be made 
for appointment to a judicial post. According to Article 86, suc- 
cessful applicants for civil service posts will be promoted on the 
basis of "skill, ability and proved civic virtue." State employees 
cdso often must have an appropriate mastery of the country's two 
official languages. 

There is no general recruitment in Finland for civil service posts, 
nor does the country have a preferred school for training civil ser- 
vants. The recruitment is done on an individual basis for a vacant 
or a newly created post. 

Civil servants enjoy a fairly secure tenure in their posts, but they 
may be dismissed for poor performance or for disreputable behavior 
on or off the job. About 90 percent of civil servants were unionized 
in the late 1980s. Since the passage of the Act on Civil Service 



238 



Government and Politics 



Collective Agreements in 1970, civil servants have had the right 
to strike. If a strike of a category of civil servants threatens socie- 
ty's welfare, the dispute may be reviewed, but not settled in a bind- 
ing way, by a special board. If required, the Eduskunta may settle 
the disagreement through legislation. 

By the early 1980s, there were about 125,000 civil servants 
employed in the nationad government, which made it the coun- 
try's largest employer. More than twice this number worked for 
local government and for related institutions. Government employ- 
ment grew rapidly during the 1960s and the 1970s, and was 
accompanied by a marked increase in the politicization of the civil 
service, especially at higher levels. Even at lower levels, posts were 
often filled on the basis of party affiliation. Sometimes appoint- 
ments were arranged by "package deals," through which the par- 
ties secured for their members a suitable portion of available posts. 
Care was taken, however, that appointees meet the stated require- 
ments for state posts, and political parties even arranged for train- 
ing so that their candidates would be qualified applicants for given 
posts. 

Politicization of public jobs resulted pardy from the desire that 
the civil service, traditionally conservative, reflect the new politi- 
cal domin2ince of the center-left governments formed after 1966. 
President Kekkonen also used the spoils system to cement the broad 
coalition governments he introduced in the second half of the 1 960s 
(see Finland in the Era of Consensus, 1966-81, ch. 1). A study 
from the early 1980s found that by 1980 the number of senior civil 
service posts occupied by nominees of the Center Party (Kes- 
kustapuolue — Kesk) 2md the Finnish Social Democratic Party (Suo- 
men Sosialidemokraattinen Puolue — SDP) had doubled for the 
former and tripled for the latter in just fifteen years, mostly at the 
expense of officials linked to the National Coalition Party (Kan- 
sallinen Kokoomuspuolue — KOK). 

Widespread criticism of the politicization of the civil service and 
complaints that the practice was harmful to efficiency and to 
democratic values led to recommendations for stricter control of 
hiring and even for the prohibition of all political appointments. 
By the late 1980s, no such ban had been instituted, but in general 
a decline in partisan nomination for civil service posts seemed to 
have occurred since the election of President Koivisto in 1982. 
Appointments in provincial governments, however, continued to 
be booty for politicians. Despite these partisan practices, the civil 
service had a reputation for competence, and it enjoyed the sup- 
port of most Finns. 



239 



Finland: A Country Study 

Provincial Administration 

Finland is divided into twelve provinces: Lappi, Oulu, Kuopio, 
Pohjois-Karjala, Keski-Suomi, Vaasa, Mikkeli, Hame, Turku ja 
Pori, Kymi, Uusimaa, and the Aland Islands. A governor appointed 
by the president heads a provincial government made up of public 
officials. At this level of administration, regarded in Finland as an 
unimportant intermediate stage between national and locad govern- 
ment, there are no elective offices. The country's provincial govern- 
ment is less extensive than that of many other countries because 
local government manages many tasks done elsewhere on the 
provincial level. 

The responsibilities of provinci2J administration include police 
work, civil defense, regional planning, price and rent control, direc- 
tion of social and health services, oversight of local governments' 
adherence to environmental and other state regulations, and 
collection of taxes, fees, and revenues owed to local and to nation- 
al government. The provincial government is aJso involved in the 
functioning of the county administrative courts, and, with authority 
granted to it by the Ministry of Justice, supervises elections. 

Local Administration 

Finland's tradition of local self-government, which predates the 
arrival of Christicinity in the country, was placed on a more modem 
footing in the nineteenth century when local functions were taken 
from the church, and communities became responsible for educa- 
tion and health matters. Universal suffrage was introduced in lo- 
cal government in 1917, and the Constitution Act of 1919 states 
in Article 51 that ''the administration of the municipalities shall 
be based on the principle of self-government by the citizens, as 
provided in specific laws." How local self-government is practiced 
in the country's urban and rural municipalities (numbering 94 and 
367, respectively, in 1988) is specified by the Local Government 
Act of 1976. 

The governing body in a municipality is the municipal council, 
the members of which, rcinging in number from seventeen to eighty- 
five, are elected by universaJ suffrage for four-year terms. Elec- 
tions are held in October, and the proportiongd representation list 
system is used. Any Finnish citizen legally resident in the munici- 
pality and at least eighteen years old by the year in which the elec- 
tion is held can vote. Since 1976, citizens of Sweden, Norway, 
Denmark, and Iceland who have been legal residents of Finland 
for at least two years may also vote. Voter turnout has generally 
been somewhat lower than in national elections. In the 1988 local 



240 



Council of State Chamber, Government Palace 
Courtesy Embassy of Finland, Washington 

elections, for example, only 70 percent of those eligible — about five 
to ten percent less than in national elections — voted. 

Finnish citizens have an obligation to serve in elective local 
government posts, which has meant that most elected officials are 
laymen. The 1976 law provides for financial compensation and pen- 
sion rights for those citizens elected to local positions. 

Candidates traditionally have campaigned for office through 
national party organizations, and local election results are regarded 
as an indication of the national parties' popularity. Local electoral 
results mirror those of national elections with regard to party 
dominance in particular regions. Members of the Eduskunta often 
have begun their careers on the local level, and they have been 
allowed to hold both local and national elective offices at the same 
time. Continued participation in politics at the grass-roots level 
has given Helsinki politicians close contact with their constituents. 

The responsibilities of municipal government include manag- 
ing the budget and financial affairs, approving plans submitted to 
it, delegating authority to committees, and making decisions on 
important issues. They also direct school, health, and social wel- 
fare systems; see to the construction and maintenance of local roads; 
provide for the management of waste and water; and supply energy. 
Many decisions relating to financial or budgetary questions require 
two-thirds majorities in council votes. This means that there is 



241 



Finland: A Country Study 

much discussion behind the scenes before votes are taken and that 
there exists the same consensus poUtics at this level as is practiced 
on the national level. Because municipal governments have no legis- 
lative or judicial powers, decisions are carried out by means of 
ordinances. 

Much of the routine work of governing is managed by the 
municipal board, which consists of at least seven people, one of 
whom is the chairman. Board members, who serve for two-year 
terms, come from the council, and they are chosen to reflect its 
party composition. The board prepares matters to be discussed by 
the council, and, if measures are approved, implements them. Aid- 
ing the board are a number of committees, some obligatory. 

A staff of trained municipal employees assists the council, the 
board, and the committees. To meet their overall responsibilities, 
municipal governments employed a large number of persons, about 
17 percent of the country's total work force in the 1980s. For duties 
too broad in scope for a single municipality, the managing of a 
large hospital for example, communities join together to form con- 
federations of minicipalities or joint authorities. By the 1980s, there 
were about 400 of these bodies. Local authorities are also obliged 
by the Local Government Act of 1976 to formulate, publish, and 
frequently revise a five-year plan covering administration, finan- 
cial affairs, economic growth, and land use. Expert assistance from 
national government bodies, such as the Ministry of Interior, helps 
local bodies to fulfill this obligation. 

The responsibilities of local government have grown in recent 
decades, and in the 1980s about two-thirds of public sector spend- 
ing was in the hands of local authorities. Local involvement in plan- 
ning also meant that 10 percent of the investment in the nation's 
economy came from municipal coffers. In order to meet their 
responsibilities, local governments have the right to tax, including 
the right to establish local tax rates, a power needed for their 
independence, but one that supplies them with only 40 percent of 
the monies they expend. The remainder is furnished by the national 
government (a little over 20 percent) or is derived from various 
fees and charges. 

Finnish local self-government is subject to a variety of controls. 
The national government decides the municipalities' duties and 
areas of responsibility, and once they are established, only a law 
passed by the Eduskunta may alter them. The municipalities are 
obliged to submit many of their decisions to a regional body or 
to a national government agency for approval. This control, 
however, is often rather loose, and only when a local government 
has broken a law does the provincial or the national government 



242 



Government and Politics 



intervene. Except for minor changes, proposals to higher levels of 
government are not amended by them, but rather are returned to 
local authorities, who themselves modify measures or decisions to 
meet prescribed standards. 

Meetings of municipal councils are generally open to the pub- 
lic, and though board and committee meetings are closed, records 
of their proceedings are subsequently published. Local governments 
or communes are also obliged to publicize their activities. 
Individuals who believe they have been wronged by a municipal 
policy may appeal to the courts or to officials at the provincial or 
nation2il level. 

Electoral System 

Universcd suffrage for national elections was introduced to Fin- 
land in 1906, and it was extended to local elections in 1917. With 
the exception of some minor reforms, the original proportional 
representation system remains unchanged. This system enjoys full 
public support, for although it favors larger parties slightly, propor- 
tional representation allows political participation of small, and even 
marginal, groups as well. 

All Finns over the age of eighteen by the year of an election are 
eligible to vote. Voting is not compulsory, and, in the 1980s, par- 
ticipation averaged around 80 percent, slightly below the average 
rate of the Nordic countries. 

In the 1980s, the country was divided for national elections into 
fifteen electoral constituencies, fourteen of which sent between seven 
and twenty-seven representatives to the Eduskunta, according to 
their population. The constituency for the Aland Islands sent 
one. Constituencies corresponded to provinces except that Hame 
Province and Turku j a Pori Province were each divided into two, 
and Helsinki formed one electoral district itself. The five southern- 
most constituencies supplied nearly half of the Eduskunta' s 
delegates. In the early 1980s, one delegate represented about 24,000 
Finns. 

Candidates for the Eduskunta are ailmost invariably nominated 
by a political party, although a 1975 amendment to the election 
law allows the candidacy of a person sponsored by a minimum of 
100 Finns united in an electoral association. Party lists for a con- 
stituency contain at least fourteen names — and more for those con- 
stituencies with high populations. Since 1978 a secret primary 
among party members has been required if a party has more can- 
didates than places on its party list. Parties may form electoral 
alliances with other parties to present their candidates, and they 



243 



Finland: A Country Study 

often do so because of lack of resources. This practice partly explains 
the high number of small parties successfully active in Finnish 
politics. 

Since the introduction of proportional representation in 1906, 
Finland has used the d'Hondt constituency list system with only 
slight modifications. Under this system, elections are based on 
proportionality rather than on plurality, and seats are allotted to 
parties commensurately with the number of votes polled. Votes 
go to individual candidates, however, and voters indicate their 
preferred politician by circling the number assigned to him or to 
her on their ballots. 

The Finnish system is distributive in several ways. There is no 
electoral threshold, such as the Swedish requirement that a party 
receive at least 4 percent of the votes in order to sit in parliament. 
In Finland it was feared that a threshold requirement might deprive 
the Swedish- speaking minority of seats in the Eduskunta. The Fin- 
nish system also favors parties with a pronounced support in cer- 
tain areas, rather than those with a thin nationwide presence. Parties 
are not obliged to contest Eduskunta elections in every constituency. 
The practice of voting for an individual candidate rather than for 
a party means that voters can register their dissatisfaction with a 
party's policy or leadership by voting for one of its junior candi- 
dates. This characteristic of the Finnish system means that no can- 
didate, no matter how senior or renowned, is assured election. 

Elections for the 200-seat Eduskunta are held every four years 
in March, except when the president has dissolved the body and 
has called for an early election. Municipal elections t2ike place every 
four years in October. 

The presidential election occurs every six years in the month of 
January. Beginning with the 1988 election, it is to be carried out 
on the basis of direct universal suffrage. If none of the candidates 
receives more than half of the votes, 301 electors, chosen in the 
same election, choose the next head of state. Although pledged in 
the campaign to particular presidential candidates, members of the 
electoral college have the right to vote in the body's secret ballots 
for any candidate who has won at least one elector. If no candi- 
date secures a majority of the college in the first two ballots, one 
of the two candidates who has received the most support on the 
second baUot will be elected president in the third and final vote. 
By the late 1980s, there was serious discussion of doing away with 
the electoral college completely and making the president's elec- 
tion dependent on a direct vote with no majority required. 



244 



Government and Politics 

Aland Islands 

The province of the Aland Islands enjoys considerable autono- 
my by virtue of the Autonomy Act of 1951 that guarantees the way 
of life and the preservation of Swedish traditions on the islands. 
The 1951 law was supplemented by a 1975 law that restricts the 
acquisition of real estate on the islands. Both laws have constitu- 
tional status, and they may be altered only in accordance with the 
strict parliamentary provisions that protect the Constitution. 

In addition to this protection against legislation prejudicial to 
its interests, the archipelago's provincial assembly, the Landsting, 
has the right to ratify laws affecting it. The Landsting consists of 
thirty members elected on the basis of proportional representation 
for four-year terms. Voters must be eighteen years of age by the 
year of the election and must have the right of domicile on the is- 
lands, a right acquired by living for at least five years in the 
province. Those with this right may also exercise certain profes- 
sions and may acquire real estate, and they may not be conscript- 
ed if they have been residents of the islands since before their twelfth 
year. This last provision resulted from the demilitarized and neu- 
trzil status of the islands established by a decision of the League 
of Nations in 1921 (see Finnish Security Policy Between the Wars, 
ch. 1). 

The Landsting has the right to pass laws that touch on adminis- 
tration, provincial taxation, police matters, transportation, health 
care, and cultural matters. Issues relating to the Constitution, na- 
tional defense, foreign affairs, the judiciary, family law, and civil 
law are outside its competence. All laws passed by the Landsting 
must be approved by the president of the republic, who may veto 
those laws judged to exceed the Landsting' s competence or to 
damage the country's internal or externad security. 

The highest executive authority in the province is the Provin- 
cial Executive Council, consisting of seven members elected by, 
and from within, the Landsting. The council must enjoy the con- 
fidence of the Landsting to carry out its duties, and the president 
of the council can be forced to resign if this is not the case. 

The governor of the province represents the national govern- 
ment. He is appointed by the president of the republic, but only 
after the approval of the Landsting, and is responsible for those 
administrative functions beyond the competence of provincial 
authorities. Another link between the islands and the national 
government is the Aland Delegation, usually headed by the provin- 
cial governor; its other four members are chosen by the Council 
of State and the Landsting. The delegation's chief duties are 



245 



Finland: A Country Study 



supervising transfers of funds from the national government to the 
provincial government, to pay for the costs of self-government, and 
examining laws passed by the Landsting, before sending them to 
the president. In addition to these ties between the archipelago aind 
the mainland, the province has one representative in the Eduskunta 
who usually has a seat on the Constitutional Committee in order 
to protect the islands' rights. Since 1970 the province has had one 
delegate at the annual meeting of the Nordic Council. 

During the late 1980s, changes of a constitutional nature in the 
relations between the Aland Islands and the national government 
were under review in the Eduskunta. The projected legislation 
touched on increased provincial control of the tcixes the archipelago 
pays or generates and on greater control over radio and television 
reception, with the aim of increasing access to programming from 
Sweden and to the Swedish-language programs of the Finnish 
broadcasting system. Having secured the right to issue their own 
stamps in 1984, the archipelago's inhabitants also wanted to have 
their own postal system, a right still reserved to the national govern- 
ment. Under discussion, too, were international guarantees for the 
islands' security. 

Political Dynamics 

Consensus has been the dominant mode of Finnish politics since 
the formation of a broadly based coalition government in 1966 and 
the establishment of the comprehensive incomes policy system in 
the late 1960s. The government, made up of parties fundamentally 
opposed to each other, was formed at the insistence of President 
Kekkonen. He had long wished to heal the deep and bitter rifts 
that had marred Finnish public life since the country had gained 
independence in 1917. 

The dozen or so political parties that made up the country's party 
system in 1966 reflected the divisions that ran through Finnish 
society. The socialist end of the spectrum was broken into two mutu- 
ally hostile, roughly equal segments, communist and social 
democratic, often accompanied by leftist splinter groups. The 
political middle was filled, first, by the agrarian Center Party, the 
country's most important party, with a rural base in a society that 
was rapidly becoming urbanized; second, by the Swedish People's 
Party (Svenska Folkpartiet — SEP), representing a minority wor- 
ried about its future and divided along class lines; and third, by 
a classic liberal party that was in decline. The right consisted of 
a highly conservative party tied to big business and to high offi- 
cials, the KOK; and the radical Finnish Rural Party (Suomen 
Maaseudun Puolue — SMP), the populist impulses of which linked 



246 



Government and Politics 



it to the "forgotten" little man often also resident in urban areas. 
Kekkonen's presidential power and personal prestige enabled bin; 
to form in 1966 the popular front government that pulled together 
sizable social groups to realize important welfare legislation in the 
late 1960s. 

The mending of rifts in the labor movement and a fortuitous 
agreement in 1968 by leading actors in the market sector led to 
the first of a nu/nber of comprehensive incomes agreements. These 
agreements, reached by organizations representing most econom- 
ically active Finns, usually ran for several years and often required 
enabling legislation (see Industrial Relations, ch. 3). 

Critics of the agreements, which have brought much prosperity 
to Finland and therefore enjoy widespread support, charge that 
their monolithic quality has meant not consensus but a "time of 
no alternatives." According to this view, the agreements have 
reduced state institutions to mere ratifying agents rather than 
governing bodies. It is claimed that labor and business negotiate 
while government approves after the fact. 

Most of the country's political parties, so fractious and distinct 
until the 1960s, then drifted toward the political center; remain- 
ing disagreements among the principal parties focused less on what 
policies were to be than on how they were to be implemented. 
Because most economic legislation required the set majorities stipu- 
lated by laws of constitutional status, parties were obliged to work 
closely together. Even parties not in government have had their 
say about the content of economic legislation, for without their 
approval many government bills would have failed. 

Another characteristic of Finnish politics and public life was the 
common practice of reaching agreements on key questions through 
informal backstairs elite consultation. Often disputes were settled 
through private discussions by the concerned parties before they 
were handled in the formal bargaining sites established for their 
public resolution. This was true for wage package settlements, as 
weU as for legislative proposals scheduled for debate in the 
Eduskunta, and for other issues that required negotiation and com- 
promise. An institutionalized version of behind-the-scenes negoti- 
ations was the Evening School of the Council of State, where leading 
figures of various groups could freely discuss issues on the govern- 
ment's agenda. The Finnish tradition of informal sauna discus- 
sions was an extreme example of informal inter-elite consultations. 
Some observers claimed that important national decisions were 
made there in an atmosphere where frank bargaining could be most 
easily practiced. Advocates of these informal means of uniting elite 
representatives of diverse interests held that they were quick and 



247 



Finland: A Country Study 

to the point. Opponents countered that they encouraged secrecy, 
bypassed government institutions, and uhimately subverted 
democracy. 

Since the second half of the 1960s, there has been an increasing 
formalization of the role played by political parties in the coun- 
try's public life. In 1967 the government began paying subsidies 
to political parties, and the passage of the Act of Political Parties 
in 1969 gave the practice a legal basis. According to the law, par- 
ties were to receive subsidies according to the number of delegates 
they had in the Eduskunta. Several other eligibility requirements 
for state funds that also had to be met were nationwide — rather 
than local — activity for political purposes, determination of inter- 
nal party affairs by democratic means, voting membership of at 
least 5,000, and a published general political program. 

The Act of Political Parties provided the first mention of parties 
in Finnish legislation, despite their central position in the coun- 
try's political life. State subsidies were a recognition of the role par- 
ties played, and the subsidies have further increased that role. 
Consequently, the number of party officials has increased, as has 
the number of parties, an effect opposite to that intended by the 
large parties that pressed for subsidies. The large parties funneled 
a good part of their funds to their local and their ancillary organi- 
zations, while the small parties, with their existence at stake, used 
their resources on the national level. 

The Social Democratic Party 

Founded in 1899 as the Finnish Labor Party, the Finnish Social 
Democratic Party (Suomen Sosialidemokraattinen Puolue — SDP) 
took its present name in 1903 and adopted a program that envi- 
sioned the gradual realization of a socialist society, not by revolu- 
tion but through parliamentary democracy. In the 1907 
parliamentary election, the SDP won eighty seats, easily surpass- 
ing the results of its closest rival, the Old Finn Party. Then, in 
1916, the last time any Finnish party has done so, the SDP won 
slightly more than an absolute majority. 

Seduced by the example of the Bolshevik Revolution in nearby 
Petrograd, many Social Democrats sought in early 1918 to realize 
long-term party goals quickly and by force (see The Finnish Civil 
War, ch. 1). After the defeat of the left in the civil war and the 
departure of radical elements from its ranks, however, the SDP 
was reconstituted in the same year under the leadership of the 
moderate Vaino Tanner, an opponent of the use of violence for 
political ends. Although still the country's largest political party, 
the SDP was in only one government — a short-lived minority 



248 



Government and Politics 



government formed by Tanner in 1926 — until 1937. At that time, 
it joined the Agrarian Party (Maalaisliitto — ML) in forming the 
first of the so-called Red-Earth governments, the most common 
and important coalition pattern for the next fifty years. A temper- 
ing of SDP policy on the place of the small farmer in Finnish soci- 
ety permitted political cooperation with the Agrarians, although 
the party retained its program of a planned economy and the 
socialization of the means of production. 

It was in 1937 that the SDP first began to demand the right to 
collective bargaining, and the party remained closely connected 
to organized labor. In 1930, for example, it had formed the Con- 
federation of Finnish Trade Unions (Suomen Ammattiyhdistysten 
Keskusliitto — SAK) in an attempt to counter communist influence 
in the labor movement. During World War II, the SDP contributed 
significantly to national unity, and it resisted both rightist dreams 
of a Greater Finland and the desires of others for an early truce 
with the Soviet Union. 

After the war, long-standing tensions within the party caused 
factional disputes, between those advocating closer relations with 
both the Soviets and the newly legalized Communist Party of Fin- 
land (Suomen Kommunistinen Puolue — SKP) and those critical 
of the Soviet Union and its undemocratic methods. Some SDP 
members left it for the newly formed popular front organization, 
the Finnish People's Democratic League (Suomen Kansan 
Demokraattinen Liitto — SKDL), which participated in the broad 
popular front government formed after the 1945 elections. After 
the defeat of the communists in the 1948 elections, the SDP held 
all cabinet posts in the minority government of 1948-1950; however, 
thereafter the party participated in cabinets on an irregular basis, 
and it was riven by internal struggles until the 1960s. 

During the 1950s and early 1960s, the SDP as a whole became 
increasingly moderate. An early indication of this move toward 
moderation was the party program adopted in 1952 that played 
down the role of class conflict and was critical of communism. Still, 
bitter internal wrangles continued to plague the party into the 1960s. 
The conflicts had both political and personal origins, but their core 
was disagreement about the SDP's policy toward the Soviet Un- 
ion. Tanner's implacable hostility to the undemocratic nature of 
Soviet society had led Moscow to insist on his imprisonment as 
a "war criminal" after the war. His reinstatement as party leader 
in 1957 has generally been regarded as a factor in the Night Frost 
Crisis of 1958 and in the SDP's subsequent exclusion from power 
until 1966 (see Domestic Developments and Foreign Politics, 
1948-66, ch. 1). 



249 



Finland: A Country Study 

Conflicts relating to domestic politics resulted in the departure 
in 1959 of members close to farming interests. They formed the 
Social Democratic Union of Workers and Small Farmers (Tyovaen 
ja Pienviljelijain Sosialidemokraattinen Liitto — TPSL), a splinter 
group that contested elections and was included in several govern- 
ments until the 1970s, when it expired and most of its remaining 
members returned to the SDP. 

The election of Rafael Paasio to the party chairmanship in 1963 
ended the reign of the old leadership and brought a gradual 
improvement in SDP relations with the Soviet Union; another result 
was a gradual healing of rifts within the labor movement. These 
changes, coupled with the election returns of 1966 that led to the 
first socialist majority in the Eduskunta since 1945, allowed the 
party to leave the political wilderness to which it had been con- 
signed after the Note Crisis of 1961 (see table 5, Appendix A). It 
participated in a strong majority government together with the 
newly renamed Center Party (formerly the Agrarian Party), the 
SKDL, and the TPSL. The popular front government passed a 
good part of the legislation that transformed Finland into a modern 
welfare state of the Scandinavian type and helped to establish the 
system of collective wage agreements that still prevailed in the late 
1980s. 

During the 1970s, the SDP moved closer to the center in Fin- 
nish politics as a result of the departure of some of the party's mem- 
bers for groups farther to the left and the cautious pragmatic 
leadership of Kalevi Sorsa, who became party chairman in 1975. 
Sorsa, who held this position until 1987, served from the mid-1970s 
until the late 1980s as either prime minister or foreign minister 
in all governments, which helped to remove any doubts about the 
party's suitability for governing. 

The SDP's success in the elections for the Eduskunta in 1983, 
coming after the triumph of SDP politician Mauno Koivisto in the 
presidential election a year earlier, may have marked a high point 
in the party's history, for in the second half of the 1980s the SDP 
had trouble attracting new voters from postindustrial Finland's 
growing service sector. The SDP's years as a governing party, which 
had tied it to many pragmatic compromises, lessened its appeal 
for some. At the same time, the number of blue-collar workers, 
its most important source of support, declined. The party could 
be seen as a victim of its own success in that it had participated 
in implementing policies that brought unprecedented prosperity 
to Finland, which served to transform Finnish society and dissolve 
old voting blocs. 



250 




upper left, Kalevi Sorsa, a 
leading Social Democrat and 
former prime minister and 
minister of foreign affairs; 
Upper right, Paavo Vdyrynen, 
a prominent member of the 
Center Party and a former 
minister of foreign affairs; 
Lower right, Harri Holkeri, 
leader of the National 
Coalition Party and prime 
minister, 1987- 
Courtesy Embassy of Finland, 
Washington 



251 



Finland: A Country Study 

The party lost 100,000 votes and the office of prime minister 
in the 1987 parliamentary elections (see table 6, Appendix A). The 
SDP remained in the government formed by the conservative 
National Coalition Party, however. Observers believed that the new 
party chairman, Pertti Paasio, son of Rafael Paasio, and other youn- 
ger members of the party would have to adapt to long-term trends 
in Finnish society that promised to make the party's future difficult. 
Although the SDP registered slight gains in the 1988 local elec- 
tions, it still had to contend with the same economic and social 
problems that made the other social democratic parties of Western 
Europe seem to many to be parties of the past. 

The Center Party 

The Center Party (Keskustapuolue — Kesk), which took this name 
in 1965 with the aim of widening its appeal and adapting to chang- 
ing social conditions, was founded in 1906 as the Agrarian Party. 
It has been, as its present name indicates, the key party in Finnish 
politics since independence; until the formation of a conservative- 
socialist government in 1987, it had participated in virtually every 
majority government. Founded to represent the interests of small 
farmers in eastern and in northern Finland, Kesk also gradually 
came to claim central Finland as an area of support during the 
1920s. As a consequence, it was the largest nonsocialist party until 
the national elections of 1979, when the National Coalition Party 
pulled ahead. As the party of small farmers, the Kesk was, from 
its birth, suspicious of the concentrated economic power of the 
south — labor, large farmers, and business. To counter these 
interests, the party advocated a firmly democratic and p>opulist pro- 
gram that emphasized the primacy of the family farm, small-scale 
firms managed by their owners, decentralization of social organi- 
zations, and the traditional virtues and values of small towns and 
the countryside. The party's commitment to democracy was test- 
ed and proven in the 1930s when it rejected the aims of the radical 
right and perhaps saved Finland from fascism. In the second half 
of the decade, it began to govern with the assistance of the SDP, 
forming with that party the first of the so-called Red-Earth govern- 
ments that became the country's dominant coalition pattern for 
the next half-century. Kesk's claim to represent the "real" Fin- 
land, however, caused it, at times, to seek to curtail the rights of 
the Swedish-speaking minority, and some Kesk leaders, Urho 
Kekkonen for example, were active in the Finnicization program. 

Although opposed to fascist doctrines, Kesk had favored fight- 
ing on the side of Nazi Germany — as a cobelligerent — during 
the Continuation War of 1941-44, in the hope of regaining lost 



252 



Government and Politics 



national territory. During the course of the war, however, some 
of the party's leaders came to the conclusion that good relations 
with the Soviet Union were essential if Finland were to survive as 
an independent nation. Kekkonen, in particular, was a driving force 
in effecting this change of party policy in the postwar period (see 
Domestic Developments and Foreign Politics, 1948-66, ch. 1). This 
policy change was achieved, though, only after a bitter struggle 
during which segments of the party's leadership hoped for Kekko- 
nen' s political destruction; however, generational change and his 
domestic and foreign successes allowed Kekkonen gradually to gain 
nearly absolute control of the party, which he retained even after 
election in 1956 to the presidency, a post ideally above party politics. 

Soviet desires for a dependable contact in Finland, and the 
unsuitability of other parties, soon made Kesk Moscow's preferred 
negotiating partner, despite the party's anticommunist program. 
The Soviets' natural ally, the SKP, was seen as being too much 
a political outsider to be an effective channel of communication. 
Kesk's position in the center of the political spectrum made it the 
natural "hinge party" for coalition governments. After the Note 
Crisis, Kekkonen 's mastery of foreign policy also served, and at 
times was cynically used, to preserve this role. 

Postwar social changes, such as internal migration to the south 
and a growing service sector, have reduced support for Kesk and 
have brought about a steady decline in its share of seats in the 
Eduskunta (see table 4, Appendix A). Attempts to bring the party's 
program into line with a changing society did not win Kesk new 
support. In prosperous southern Finland, for example, Kesk failed 
to make significant inroads, electing only once a member of the 
Eduskunta from Helsinki. Young voters in the south, or the coastal 
region as it is sometimes called, favored the National Coalition Party 
or the environmentalist Greens (Vihreat). Also damaging to Kesk 
was the loss of a segment of its membership to the SMP, after its 
formation in 1959. Kesk was not able to retain the presidency after 
Kekkonen's retirement in 1981; its candidate for the 1982 presiden- 
tial election, Johannes Virolainen, was easily defeated, as was the 
1988 Kesk candidate for this post, Paavo Vayrynen. 

Kesk's failure, despite only slight losses, to participate in the 
government formed after the 1987 national elections was perhaps 
a watershed in Finnish domestic politics. Until that time, Kesk had 
been an almost permanent governing party. Demographic and 
occupational trends continued to challenge Kesk in the late 1980s, 
but the party's large and convinced membership, far greater than 
that of any other party, probably meant that any decline in its role 
in Finnish politics would be a slow one. 



253 



Finland: A Country Study 

The National Coalition Party 

The National Coalition Party (KanscJlinen Kokoomuspuolue — 
KOK) was founded in November 1918 by members of the Old Finn 
Party and, to a lesser extent, by followers of the Young Finn Party. 
It represented interests desiring a strong state government that 
would guarantee law and order and the furtherance of commerce. 
Defeated in its attempt to establish a monarchical government, the 
party formulated a program in 1922 that clearly set out its conser- 
vative aim of emphasizing stability over reform. The large farms 
and businesses in southern Finland were the basis of the party's 
support. 

Throughout the interwar period, the party was hostile to the 
rights of the Swedish-speaking minority and sought to deprive the 
Swedish language of its status as one of the country's two official 
languages. During the 1930s, it had close contacts with the radical 
right-wing movements that mirrored trends elsewhere and for a 
time posed a threat to Finnish democracy. One of the party's lead- 
ers, Juho Paasikivi, elected party chairman in 1934, attempted with 
some success to move it away from these extreme positions. The 
KOK was opposed to the Red-Earth government formed in 1937, 
but was not strong enough to prevent it. During the war, the party 
was part of the national unity governments. 

After the war, the KOK became the most right-wing party in 
Finland, as groups farther right were banned by the armistice agree- 
ment of 1944 and the SKP was legalized (see The Cold War and 
the Treaty of 1948, ch. 1). Despite Paasikivi 's terms as prime 
minister in the first postwar years, his election to the presidency 
in 1946, and the role he played in the drafting of the Treaty of 
Friendship, Cooperation, and Mutual Assistance (FCMA — see Ap- 
pendix B) as well as in the reorienting of Finnish foreign policy, 
his party was not regsirded as an acceptable coalition partner for 
much of the postwar period. Soviet doubts about the sincerity of 
KOK's support for the new direction of Finnish foreign policy, 
the so-called Paasikivi Line, was sufficient to keep the KOK, for 
decades the country's second largest nonsocialist party, out of 
government for most of the postwar period. 

The party also was excluded from governments because it was 
seen by many to be rigidly right-wing, despite party program 
changes in the 1950s that moved it closer to the conservatism prac- 
ticed by its sister parties in larger West European countries. The 
party program of 1957 formalized its support for a "social market 
economy" and for the concept of employer responsibility to wage 
earners. 



254 



Government and Politics 



In the postwar years, the KOK often allied with the SDP to 
reduce agricultural subsidies, a joint effort that continued in the 
late 1980s. The division between city and country interests con- 
tinued to be a key element in Finnish politics in the second half 
of the 1980s, and it was one reason why the two principal non- 
socialist parties, the KOK and Kesk, were political rivals. 

An action that increased the enmity between the KOK and the 
Kesk leader, Kekkonen, and contributed to the Note Crisis was 
the formation of the so-called Honka League by the KOK and the 
SDP. The Honka League aimed to stop Kekkonen 's reelection in 
1962, but the attempt never had a chance, and it was soon aban- 
doned. The KOK continued to be opposed to Kekkonen and to 
his foreign policy, however, and it was the only major party to 
oppose his reelection in 1968. Nevertheless, moderate elements in 
the party gradually gained control and softened its policies, both 
domestic and foreign. In the 1970 national elections, the KOK 
increased the number of its seats in the Eduskunta by one- third, 
and since 1979 it has been the largest nonsocicilist party in the 
country. 

Some right-wing members of the KOK, dissatisfied with the 
party's steady drift toward the politic2il center, have left it. In 1973 
some formed the Constitutional Party of the Right (Perustuslailli- 
nen Oikeistopuolue — POP) to protest Kekkonen 's special election 
to the presidency in 1974, but this only accelerated the KOK's move 
toward moderation. Under the leadership of Harri Holkeri — the 
party's candidate for the presidency in 1982 and in 1988, and Ilkka 
Suominen — longtime party chairman, the KOK has been able to 
attract many of those employed in Finland's rapidly growing service 
sector, and in the 1987 elections it nearly overtook the SDP. Kept 
out of power because of unexpected losses in the 1983 Eduskunta 
elections, Holkeri was able to form a government after the 1987 
elections and to take the prime ministership for himself. He pledged 
his government to a program of preserving Finland's welfare state 
while maintaining a free market economy strong enough to be com- 
petitive abroad and to safeguard the country's prosperity. 

The Communist Party of Finland 

The Communist Party of Finland (Suomen Kommunistinen 
Puolue — SKP) was founded in August 1918 in Moscow by exiled 
leftists after their defeat in the civil war. Its Marxist-Leninist 
progrcim advocated the establishment of a socialist society by revolu- 
tionary means. Declared illegal the following year, the SKP 
was active in Finland during the 1920s through front groups, the 
most notable of which was the Finnish Socialist Workers' Party 



255 



Finland: A Country Study 

(Suomen Sosialistinen Tyovaenpuolue — SSTP), which received 
more than 100,000 votes in the 1922 national election and won 
27 seats in the Eduskunta. The rise of the radical right-wing Lapua 
movement was a factor in the banning of all communist organiza- 
tions in 1930, and the SKP was forced underground (see The 
Establishment of Finnish Democracy, ch. 1). 

The Stalinist purges of the 1930s thinned the ranks of the SKP 
leadership resident in the Soviet Union. A survivor of the purges 
and one of the founders of the party. Otto Kuusinen, was named 
to head a Finnish puppet government set up by the Soviets after 
their attack on Finland in 1939. It did not ever attract the support 
from the Finnish workers that the Soviets expected, nor did the 
SKP succeed, during the Continuation War, in mounting a 
resistance movement against Finnish forces fighting the Soviet 
Union. At the war's end, the SKP was able to resume open politi- 
cal activity within Finland; in the 1945 election it won forty-nine 
seats and was rewarded with several posts in the resulting cabinet 
(see The Cold War and the Treaty of 1948, ch. 1). 

In this election, as in all elections since then, the SKP worked 
through an umbrella organization, the Finnish People's Democratic 
League (Suomen Kansan Demokraattinen Liitto — SKDL), estab- 
lished with the aim of uniting all left-wing elements into a com- 
mon front. Although mainly composed of noncommunists, and 
usually led by a noncommunist socialist, the SKDL has generally 
been dominated by the SKP. Despite its initial electoral success, 
however, the SKDL has not been successful in attracting all Fin- 
nish leftists, and the bulk of the SDP has refused to work with it. 

The SKDL was not able to retain its hold on the voters in the 
1948 Eduskunta election, and it lost eleven seats. Rumors of a 
planned communist coup contributed to this defeat. During the 
1950s and the early 1960s, the SKP/SKDL continued to partici- 
pate in the electoral process, but with mixed results. The 
SKP/SKDL did not enter government again until 1966, when Kek- 
konen insisted that the group be given ministerial posts so that a 
broadly based coalition government could be formed. After this 
date, the party was in most governments until December 1982, 
when Prime Minister Sorsa forced it to resign for refusing to sup- 
port a part of the government's program. 

Tensions long present in the SKP became more pronounced in 
the second half of the 1960s, when social changes began putting 
pressure on the party to adapt itself to new conditions. Internal 
migration within Finland, from the northern and eastern areas 
where "backwoods communism" had always been a mainstay of 
party support, deprived the SKP of votes. The gradually increasing 



256 



Government and Politics 



service sector of the economy reduced the size of the blue-collar 
vote in the south that the SKP had traditionally split with the SDP. 
A more prosperous economy also softened social divisions and made 
the classic Marxist remedies expounded by the party seem less rele- 
vant. Failure to attract younger voters worsened election results 
in addition to leaving the party with an older and less educated 
membership. These threatening trends, combined with the SKP's 
participation in governing coalitions since 1966, brought to a head 
political disagreements between those in the party who supported 
the system of parliamentary democracy and those who were attached 
to a totalitarian Stalinist ideology. After 1969 the party was virtu- 
ally split, although the formal break came only in 1986 following 
years of bitter dissension. 

Through the 1970s and the first half of the 1980s, two factions, 
a majority reformist or revisionist wing, led first by Aarne Saari- 
nen (1966-82) and then by Arvo Aalto (1982-88), and a minority 
Stadinist wing, under Taisto Sinisalo, fought for party dominance. 
Each group had its own local and regional organization and its own 
newspaper — the moderates, Kansan Uutiset and the doctrinaire fac- 
tion, Tiedonantaja. Both groups remained in the SKP largely at the 
insistence of the Communist Party of the Soviet Union (CPSU). 
The revisionists, sometimes characterized as Eurocommunists, took 
posts in cabinets, but the Stalinists, or "Taistos" as they are often 
called after the first name of their leader, refused to do so, prefer- 
ring to remain ordinary members of the Eduskunta instead. To 
heal the rift, a third faction appeared in the early 1980s, and for 
a time one of its leaders, Jouko Kajanoja, was party chairman. 

The 1984 election of Aalto to the party chairmanship marked 
the end of the attempted reconciliation, and in 1985 the revisionists 
began to purge the Stalinists, who late in the year named their fac- 
tion the Committee of SKP Organizations. The revisionists resisted 
pressure for unity from the CPSU, and for this they were punished 
in late 1985 when the Soviets cancelled the highly profitable con- 
tract with the SKP to print Sputnik, an international magazine. The 
CPSU gave the contract to a printing firm controlled by the 
minority. The resulting financial losses meant that Kansan Uutiset 
could appear only five days a week. 

In 1986 the split was formalized. Early in the year, the reform- 
ist group published a new program that stressed the importance 
of an independent, yet friendly, relationship with the communist 
parties of other nations. In April the Stalinists set up an electoral 
organization distinct from the SKDL, the Democratic Alternative 
(Demokraattinen Vaihtoehto — DEVA). In June the SKDL party 
group in the Eduskunta expelled the DEVA representatives from 



257 



Finland: A Country Study 

its ranks, and the latter then formed their own parHamentary group. 
Later in the year, the two factions set different party congress dates, 
further formalizing the split. In the 1987 election, the two groups 
competed with one another, and they had separate lists of 
candidates — the DEVA members led by the actress Kristiina 
Halkola and the SKP/SKDL led by Arvo Aalto. The Stalinists lost 
six of their ten seats in the Eduskunta, while the reformists lost one. 

In the late 1980s, the two factions appeared more and more 
irrelevant as actors in Finnish politics. The reformists supported 
the democratic system, yet they attracted few new recruits. The 
Stalinists, opposed to the central values held by most Finns, split 
even further. In 1988 some of them formed a new party, the Fin- 
nish Communist Party-Unity (Suomen Kommunistinen Puolue- 
Yhtenaisyys — SKP-Y), and campaigned with DEVA in the local 
elections of the fall of that year. An even smaller number, claim- 
ing to represent the truest principles of communism, refused to join 
this new party and formed their own. 

The Swedish People's Party 

The abolition of the four-estate Diet and the introduction of 
universal suffrage in 1906 made it clear to the Swedish- speaking 
elite that its traditional domination of Finnish politics was at an 
end. The only chance to protect the rights of Swedish- speaking Firms 
was seen to lie in the formation of a party with a broader base that 
would unite all classes of the minority. For this reason the Swed- 
ish People's Party (Svenska Folkpartiet — SEP) was created in 1906. 
Composed of members from all classes, the party passed over eco- 
nomic questions to concentrate on preserving the existence of 
Swedish-speaking Finns as a cultural group. 

Desires for local autonomy in the southern and western coastal 
areas, where Swedish Finns had lived for centuries and from which 
the party still drew its support in the late 1980s, were not met by 
the Constitution Act of 1919 (see fig. 12). The Swedish language 
was guaranteed the status of an official language, however, and 
it was given specicd protection in those areas in which it tradition- 
ally had been spoken. During the interwar decades when Swedish- 
speaking Finns were under serious Dressure from the Agrarian Party 
and the National Coalition Party, the SEP allied itself with the SDP 
to protect minority rights, for though conservative in economic mat- 
ters, the SEP was liberal on social questions. SDP compromises 
with the Agrarians in order to come to power in the Red-Earth 
governments of 1937 brought the Swedish minority some reverses, 
but the Finnicization program was not fully realized. 



258 



Government and Politics 



After the war, the language question was considered to be set- 
tled in a way generally satisfactory to most Swedish-speaking Finns. 
The SFP saw to it that the setdement of 400,000 refugees from 
Karelia did not upset the existing language badance in the areas 
where Swedish- speaking Finns made up a significant segment of 
the population. Relations between the SFP and the ML remained 
strained, however, because of the Agrarians' role in attempts at 
Finnicization. 

The steady decline in the number of Swedish-speaking Finns was 
reflected in the size of the party's delegation in the Eduskunta. The 
Finnish electoral system favored parties with strongly localized sup- 
port, however, and because of its position in the center of the po- 
litical spectrum the SFP has been in most cabinets formed since 
the war. The virtucd collapse of the Liberal People's Party (Libe- 
raalinen Kansanpuolue — LKP) in the latter half of the 1970s 
brought the SFP some new votes, and in the 1983 and the 1987 
elections, the party increased the number of its seats in the Eduskun- 
ta. Like the larger parties, the SFP has been affected by the gener- 
al drift toward the center, and some of its right-wing members have 
left it for parties such as the POP. 

Smaller Parties and the Greens 

In addition to the four large parties discussed above, which among 
them enjoyed the support of about 80 percent of Finland's voters, 
and the SFP, which despite its small size had an almost perma- 
nent place in coalition governments, there were several other 
political parties that had a role in governing the country. One, the 
LKP, was a vestige of its former self; others, such as the Greens 
or the SMP were responses to trends seen elsewhere in recent 
decades in Western Europe. 

The LKP is direcdy descended from the Young Finn Party, which 
after independence took the name National Progressive Party (Kan- 
sallinen Edistyspuolue — ED) and played a major role in Finland 
during the interwar period (see The Era of Russification, ch. 1). 
After World War II, this party declined in strength and was dis- 
solved in 1951 . Liberals subsequendy formed two other parties that 
joined together in 1965 under the present name. Liberals in one 
party organization or another continued to participate in most 
governments until 1979. These liberals were proponents of busi- 
ness interests and the protection of private property, but they spoke 
also of the need for government planning and for social welfare 
programs. The LKP has steadily lost support to the other non- 
socialist parties, however. In the 1983 and the 1987 nation2il elec- 
tions, it failed to win any seats in the Eduskunta, and in the local 



259 



Finland: A Country Study 

elections of 1988 it lost more than a quarter of its representatives 
on municipal councils. In the late 1980s, the future of this once- 
important party was uncertain at best. 

The SMP was founded in 1959 by the prominent and charis- 
matic Kesk politician, Veikko Vennamo, who broke with Kekko- 
nen for both political and personal reasons. The party, viewed for 
most of its life as rightist, has always campaigned as a protest party 
fighting for the interests of the "forgotten man," neglected or 
ignored by larger parties. This populist party first found support 
among small farmers, but it later received votes also from city 
dwellers who were keenly dissatisfied with mainstream politics. The 
SMP's support fluctuated wildly from election to election, and no 
safe estimate about its future was possible in the late 1980s. This 
was especially the case after its inclusion in governing coalitions. 
After considerable success in the 1983 election, it got two ministerial 
posts. It therefore competed in the 1987 election as a governing 
party, and it lost nearly half its seats in parliament. Equally bad 
results were obtained in the 1988 local elections. In addition, 
although led in recent years by the founder's son, Pekka Vennamo, 
the party was torn by dissension. With a single post in the govern- 
ment, even after the disastrous 1987 results, the SMP was in danger 
of losing its character as a protest party, the role which had brought 
it voter support. 

The Finnish Christian League (Suomen KristiUinen Liitto — 
SKL) was founded in 1958 to bring Christian ideals into politics 
and to curb secularist trends. Its members generally belonged to 
the state church, yet they did not claim to act in its behalf but for 
Christian values in general. The party's support has fluctuated since 
it won its first seat in the Eduskunta in 1970. The SKL has never 
had a ministerial post, even in 1979 when it won ten parliamen- 
tary seats. Its share of votes declined sharply in the next national 
election, but rose again in 1987, and observers believed that a relia- 
ble base of support remained that was likely to ensure its continued 
existence. 

An environmentalist group, the Greens was not an offlciaUy 
registered party during the first years of its existence, and it there- 
fore received no government support for the 1983 and the 1987 
national elections. It was organized in the early 1980s as an elec- 
toral association to work on a variety of quality-of-life issues and 
to contest elections on both the local and the national level. In 1983 
the group won two seats in the Eduskunta, the first time an elec- 
toral association had managed such a feat. In the 1984 local elec- 
tions, they doubled their support, and in the 1987 election they 
won four parliamentary seats. 



260 



Government and Politics 



The group's membership was heterogeneous with regard to both 
origins and aims. Activists were drawn from academia, the mid- 
dle class, and the disabled, as well as from feminist and bohemian 
circles. This diversity was reflected in the multitude of members' 
goals, ranging from modest reforms to a Utopian shutdown of 
industry and a return to subsistence farming. In mid- 1988 part 
of the movement split off and formed a registered political party, 
the Green League (Vihrea Liitto). The Greens as a whole suffered 
a slight setback in the 1988 local elections. Given its internal dis- 
sension, the role the environmentalist movement was to play in 
governing Finland was likely to remain small. 

Interest Groups 

Interest group politics in Finland was managed primarily by the 
large market- sector organizations that represented labor and 
management. By the mid-1980s, about 85 percent of the work force, 
both blue-collar and white-collar, belonged to four labor federa- 
tions encompassing about 100 labor unions. The largest and oldest 
was SAK, which united the approximately 1 million members, 
mainly blue-collar, of twenty-eight unions. SAK dated from 1907 
and was close to the SDP, but it had within it several unions domi- 
nated by communists. The Confederation of Salaried Employees 
and Civil Servants (Toimihenkilo- ja Virkamiesjarjestojen Kes- 
kusliitto — TVK) consisted of 14 unions with about 370,000 mem- 
bers who voted for a variety of left-wing and right-wing parties. 
The Central Organization of Professional Associations in Finland 
(Akava) was made up of 45 unions, in which 210,000 members — 
white-collar professionals — voted mainly for conservative parties. 
The Confederation of Technical Employees' Organizations in Fin- 
land (Suomen Teknisten Toimihenkilqjarjestojen Keskusliitto — 
STTK) united 15 unions, in which 130,000 members — lower-level 
white-collar employees — split their votes among all parties. 
Representing the interests of farmers and close to the Kesk was 
the Confederation of Agricultural Producers (Maataloustuottajain 
Keskusliitto — MTK), with about 300,000 members. Represent- 
ing industry and management were the Confederation of Fin- 
nish Employers (Suomen Tyonantajain Keskusliitto — STK), made 
up of twenty-eight member organizations representing 6,000 
firms, and the Confederation of Commerce Employers (Lii- 
ketyonantajain Keskusliitto — LTK) including nearly 7,000 firms; 
firms belonging to the STK and the LTK had some 800,000 
employees in 1985. 

These organizations could speak for the bulk of Finland's work 



261 



Finland: A Country Study 



force and business firms, and, since the first of a series of compre- 
hensive incomes policy agreements was concluded in 1968, they 
had come to rivgJ the government in determining how the coun- 
try's affairs were to be managed. The setdements, arranged gener- 
ally at two-year intervals, frequently involved not only wages and 
working conditions but also social welfare programs that required 
legislation for their realization. This obliged the governing coali- 
tion and the other parties represented in the Eduskunta to be fully 
apprised of the terms of the setdement. 

The government itself provided officials to assist in the negotia- 
tions between labor and management. In 1971 it made permanent 
the post of special negotiator for incomes policy, and a year later 
it created a board within the prime minister's office to assist this 
official. On occasion, when negotiations have gone poorly, the prime 
minister or the president has intervened. The government also has 
facilitated the incomes agreements by providing expert advice on 
probable future economic conditions and on what the contending 
parties could reasonably demand. At appropriate times, leading 
officials and politicians have issued statements so that by the winter, 
when formal negotiations began, there was a broadly accepted eco- 
nomic framework within which these negotiations could take place. 

Outside the wage agreement system, social groups, or interests, 
generally worked through the established parties to further their 
objectives through meetings, lobbying, and other me2ins of voic- 
ing their concerns. To secure the support of some segments of the 
population, most politiczd parties organized student, youth, and 
sports groups. Parties often devoted as much as one-third of their 
financial resources to their auxiliary and local branches. 

Finnish women, like other groups, sought to further their interests 
mainly through the country's politiccd and economic organizations. 
The parties took care that a good number of their leaders were 
women, and by the 1980s women made up about one-third of the 
Eduskunta. Women were represented in market-sector organiza- 
tions according to their occupations. The women's movement was 
small; it did not play a significant role in Finnish political life, even 
though it had existed since the 1880s, when the first organization 
involved in women's rights was founded. The two main women's 
organizations active in Finland in the 1980s were the Feminist 
Union (Naisasialiitto Unioni), dating from 1892, and the infor- 
mal collective. Feminists (Feministit), founded in 1976. They were 
both apolitical, and their membership, though mainly from the edu- 
cated middle class, contained some working-class women. 

The Nordic committee system was a key forum in which Fin- 
nish interest groups, or concerned parties, made their views known 



262 



Government and Politics 



to the government. The system had long been used in the region 
to gather a range of opinions on pubhc matters. It consisted of com- 
mittees, both temporary ad hoc organs formed to dead with a sin- 
gle question and permanent statutory bodies created to handle broad 
issues, that were composed of experts and representatives of affected 
interests. Thus, advocates of labor and business, experts from local 
and national government, and, when appropriate, single-issue 
groups, could argue their cases. A committee report, if there was 
one, could be sent for review to concerned parties, and thereafter 
to a ministry, where its findings might figure in a government 
ordinance or in a legislative proposal. 

The Presidential Election of 1982 and Koivisto's Presidency 

A major change occurred in Finnish domestic politics in Janu- 
ary 1982, when the social democratic politician, Mauno Koivisto, 
was elected president. He was the first member of the SDP to be 
elevated to the country's highest post, and his election meant the 
full integration of social democrats into Finnish public life and an 
end to the postwar dominance of Kesk. 

Koivisto had been a leading public figure since the late 1960s, 
when he had served as prime minister for two years. During the 
1970s, as governor of the Bank of Finland and, for a short time, 
as minister of finance, he had won the public's respect for the 
accuracy of his economic forecasts. His personality and consider- 
able media astuteness also won him a very considerable personal 
popularity across party lines. Born in 1923 in Turku, the son of 
a carpenter, he fought bravely during World War II. After the war 
he returned to his native city, and through years of part-time study, 
earned a doctorate in sociology in 1956. He was active within the 
moderate wing of the SDP, yet did not seek an elective office. He 
began his banking career by directing a large employees' savings 
bank in Helsinki. 

Summoned again in 1979 to serve as prime minister, Koivisto 
retained the public's esteem and became a strong potential candi- 
date for the presidenticd election scheduled for 1984. Seen by Kesk 
politicians as a threat to their party's hold on the presidency after 
Kekkonen's inevitable retirement, Koivisto was pressured to resign 
in the spring of 1981 . He refused, telling Kekkonen that he would 
continue as prime minister until a lack of parliamentary support 
for his government was shown. Koivisto 's survival despite Kek- 
konen's challenge was seen by some observers as the end of an era 
in which the president had dominated Finnish public life. 

In the fall of 1981, failing health forced Kekkonen to resign the 
presidency, and Koivisto assumed the duties of the office until the 



263 



Finland: A Country Study 

presidential election set for January 1982, two ye2irs ahead of sched- 
ule. He won handily, taking 43 percent of the votes — from the high 
turnout of 87 percent — and 145 of the electors. With the support 
of some electors pledged to the SKDL candidate, he won, with 167 
ballots, in the first vote of the electoral college. His popularity 
remained high during his first term, and he easily won reelection 
in 1988. 

In his years in office, Koivisto has adhered to the Paasikivi- 
Kekkonen Line, renewing in 1983 the FCMA treaty, for exam- 
ple. In addition, he has supported the traditional policy of neu- 
trality, has spoken often of the danger of the arms race, and has 
encouraged international trade. One innovation he introduced was 
allowing greater policy roles to the Ministry of Foreign Affairs, 
the Eduskunta's Foreign Affairs Committee, and other institutions 
concerned with foreign policy. 

On the domestic front, he has been more restrained than his 
predecessor. He has preferred to let day-to-day politics run its 
course, and he has tended to see the presidency as an office from 
which he could direct the nation's attention to long-term goals. At 
times, however, delphic presidential statements have confused the 
public about his intentions. On occasion, too, he has been harsh, 
berating the press for its irresponsible coverage of foreign policy 
issues, or striking down politicians he thought too meddlesome in 
international affairs. Overall, Koivisto 's presidency has marked 
a coming of age for the Finnish polity, an emergence from the harsh 
tutelage of the Kekkonen years, and the increasing resemblance 
of Finnish politiczd life to that of other successful Western 
democracies. 

The Parliamentary Election of 1983 

As is customary in Finland after a presidential election, the 
government resigned after Koivisto 's victory in January 1982. It 
was re-formed the next month with the same four-party coalition 
(the SDP, Kesk, the SKDL,and the SFP) and many of the same 
ministers, with veteran SDP politician Kalevi Sorsa as prime 
minister. Two devaluations in October 1982, amounting to a 10 
percent fall in the value of the Finnish mark, caused complaints 
by the SKDL that low-income groups were the main victims of 
this measure designed to enhance Finnish competitiveness abroad. 
The cabinet fell at the end of the year, when Sorsa dissolved it after 
the SKDL ministers refused to support a government defense 
proposal. Immediately asked by the president to form a new govern- 
ment, Sorsa did so, but with LKP participation and without the 
SKDL. The government's slender majority of 103 votes in the 



264 



Mauno Koivisto, elected president of Finland in 1982 and re-elected 

for a second six-year term in 1988 
Courtesy Embassy of Finland, Washington 

Eduskunta was not an important handicap, for new elections were 
scheduled for March 1983. 

The election was widely regarded as a "protest election" because, 
contrary to expectations, the major parties, with the exception of 
the SDP, did not do well. The LKP lost all its seats in the 
Eduskunta, while the SMP more than doubled its seats, and for 
the first time the Greens had representatives in the chamber as well. 
The SMP's success was credited, at least in part, to voter distaste 
for some mainstream parties because of political scandals; no sig- 
nificant policy differences emerged in the election campaign. 
Another reason for the SMP gains was the increasing role of "float- 
ing votes" not bound to any one party. The SDP won fifty- seven 
parliamentary seats, the greatest number since before the war and 
a result of Koivisto 's election to the presidency. 

Seven weeks of negotiations led to the formation of a four-party 
coalition composed of the old standbys, the SDP, Kesk, and the 
SEP, and, for the first time, because of its great success, the SMP. 
The protest party of the "forgotten man," the SMP was given the 
portfolios for taxation (second minister of finance) and for labor, 
with the aim of taming it through ministerial responsibility. Because 
the government, led by the SDP's Sorsa, had the support of only 
122 votes out of 200, rather than the 134 needed to ensure the 



265 



Finland: A Country Study 



passage of much economic legislation, it might not have been 
expected to last long. It distinguished itself, however, by being the 
first cabinet since the war to serve out a full term. Its survival 
until the elections of March 1987 was an indication of a newly won 
stability in Finnish politics. 

The Sorsa cabinet stressed the continuation of traditional Fin- 
nish foreign policy, the expansion of trade with the West to coun- 
ter what some saw as too great dependence on Soviet trade, and 
the adoption of measures to reduce inflation (see Role of Govern- 
ment, ch. 3). The economic measures of the Sorsa government were 
stringent and fisccdly conservative. Public awareness of the neces- 
sity of a small exporting nation's remaining competitive allowed 
the adoption of frugal policies. The 1984 biannual incomes policy 
arrangement was also modest in its scope. The rival demands for 
the one for 1986 were less so, however, and President Koivisto had 
to intervene to ease hard negotiations. One segment of the work 
force, civil servants, won a large pay increase for itself after a seven- 
week strike in the spring of 1986. The government also brought 
inflation down from the double-digit levels of the early 1980s, but 
it was less successful in lowering unemployment, which remained 
steady at about 7 percent. 

Although the government was to be long-lived, it was not 
free of tensions. In January 1984, trouble erupted when its three 
nonsocialist parties made public a list of nine points on which 
they disagreed with the SDP. The issues were domestic in char- 
acter, and they centered on such questions as the methods of 
calculation and payment for child-care allowances, the advisa- 
bility of nuclear power plant construction, wage package nego- 
tiation methods, and financial measures to aid farmers and small 
businessmen. The storm caused by the document was calmed 
by the political skills of the prime minister and through a les- 
sened adamancy on the part of Kesk. 

Despite overall agreement on many major issues and the 
dominance of consensus politics in the governing of the coun- 
try, the parties' struggle for power was nevertheless fierce. 
Attacks on the SDP by its coalition partner, Kesk, during 1986 
were seen by some to stem from Kesk's desire for an opening 
to the right and for the eventual formation of a center-right 
government after the 1987 elections. The attacks, especially 
those of Foreign Minister Paavo Vayrynen, intensified in the 
late summer. The young Kesk leader particularly denounced 
Sorsa' s handling of trade with the Soviet Union. Sorsa sucessfuUy 
counterattacked in the fall, which forced Vayrynen to stop his 
campaign. 



266 



Government and Politics 

The Parliamentary Election of 1987 

The March 1987 elections moved the country somewhat to the 
right. It was uncertain how far, because the voter participation 
rate — at a comparatively low 75 percent, 5 percent lower than 
usual — hurt the left more than the right and had a varying im- 
pact. The KOK, for example, increased its percentage of the votes 
by only 1 percent and saw a tiny increase in absolute terms, yet 
it gained nine seats in the Eduskunta and almost caught up with 
the chamber's largest party, the SDP. The socialists' take dropped 
by 2.6 percent, with 100,000 fewer votes, yet they lost only one 
seat in the Eduskunta because of the way their votes were distributed 
across the country. Kesk garnered the same portion of the vote that 
it had in 1983, but it achieved a small increase in the actual num- 
ber of votes and gained two new seats. The Greens, who had 
registered a significant gain in the communal elections of October 
1984, got only two new representatives, far fewer than expected, 
for a tot2il of four. The SKDL, electoral vehicle of the reformist 
SKP, lost a seat, while DEVA, controlled by the Stalinist Com- 
mittee of SKP Organizations, lost six of the ten seats it had con- 
trolled since its representatives were expelled from the SKDL in 
June 1986. Weakened perhaps from its membership in the long- 
lived government, the SMP lost more than one-third of its sup- 
port and almost half of its seats. Two of the small centrist parties 
did well: the SFP gained another seat, just as it had in 1983, and 
the SKL secured two more for a total of five. 

Faced with these inconclusive results, negotiations about the 
shape of the new government got underway. After six weeks of talks 
and attempts to put together a completely nonsocialist government, 
a pathbreaking combination was formed that included conserva- 
tives and socicdists in the Council of State, joined by the dependa- 
ble and successful SFP and the battered and desperate SMP. 

The new government, consisting of nine centrist and conserva- 
tive and eight socialist ministers and headed by the KOK's Harri 
Holkeri, surprised some observers because a nonsocialist govern- 
ment was possible and seemed appropriate given the election results. 
The outcome angered others, who contended that Koivisto had mis- 
used presidential powers when he brokered a government that had 
his former party as a member despite its considerable electoral loss- 
es. Koivisto countered that he had behaved properly and had let 
the parties themselves argue out a workable combination. 

One explanation for the unusued government was that ani- 
mosity against the Kesk leader, Vayrynen, was so common in both 
the SDP 2ind the KOK that neither party was willing to form a 



267 



Finland: A Country Study 

government with him. Thus, Kesk was deprived of its traditional 
"hinge" role. Another consideration was that the SDP and the 
KOK were not so much at odds with each other as socialist and 
conservative parties elsewhere might have been. Both parties had 
moved toward the center, and they were in agreement about most 
issues, especially about the need to reduce the agriculturad subsi- 
dies that had always been defended by Kesk. The resulting "red- 
blue" government had as progr2im objectives the preservation of 
the social welfare system, the improvement of Finland's competi- 
tive position in internationed trade, a fundamental reform of the 
tax system, and adherence to the Paasikivi-Kekkonen Line in for- 
eign affairs. The SFP fit in easily with this program. The formerly 
rightist, but now moderate, SMP was included because it strength- 
ened the government slightly and because it was likely to be 
dependable, because it had no other place to go. Koivisto informed 
the new government that it would not have to resign after the 
presidential election of 1988, and observers expected the cabinet 
to serve its full term until the 1991 parliamentary elections. 

The Presidential Election of 1988 

The presidential election held on January 3 1 and February 1 , 
1988, was the first to use the new procedures for choosing the 
nation's highest official (see Electoral System, this ch.). The con- 
test's outcome, the re-election of Mauno Koivisto, surprised no 
one, yet he captured a smaller portion of the direct vote than 
expected — only 47.9 percent, rather than the 60 to 70 percent fore- 
cast by opinion polls during 1987. His failure to win more than 
hcdf of the direct, or popular, vote of the 84 percent turnout meant 
that Koivisto could claim victory only after he had the support of 
a majority of the 301 -member electoral college. This he achieved 
on the body's second ballot, when the votes of 45 of the 63 electors 
pledged to the KOK candidate. Prime Minister Hairri Holkeri, were 
added to those of the 144 electors he had won on his own. Koivisto 's 
inability to win the presidency directly was caused by an upsurge 
of support in the final weeks of the campaign for his stronger rivals, 
Kesk's Paavo Vayrynen and the KOK's Holkeri — who got 20.1 
and 18.1 percent of the vote respectively, and Kalevi Kivisto, the 
candidate of voters linked to the SKDL and the Greens, who got 
10.4 percent. The strong finish of Vayrynen and Kivisto was 
regarded by some as a vote against the KOK-SDP coalition formed 
after the March 1987 parliamentary election. The 1.4 percent gar- 
nered by the DEVA candidate, Jouko Kajanoja, indicated the mar- 
ginal role that the Stgdinist wing of the communist movement played 
in the country's political life. 



268 



Government and Politics 



The presidential campaign did not center, to any significant 
degree, on issues, but on the candidates themselves; Vayrynen and 
Holkeri both clearly wanted to position themselves well for the 
presidential election of 1994. Neither had any hope of defeating 
the ever-popular Koivisto in 1988, and it was widely assumed that 
he would not again seek reelection. Vayrynen was seen as the win- 
ner of this race for position, in that he had come from far behind 
in the polls, had easily beaten Koivisto in the northern provinces, 
had found good support elsewhere — except in the Helsinki area, 
and had cemented his leadership role in his own party. His strong 
party base and his ability to attract conservatives dissatified with 
their party's zdliance with the socialists, combined with his exten- 
sive ministerial experience, made the relatively young Vayrynen 
Finland's foremost opposition politician. His strong finish, and the 
lack of any SDP politician of Koivisto 's personad stature and 
popularity, guaranteed Kesk continued significance in the coun- 
try's political life even when in opposition, and were perhaps signs 
that the dominance of post-industrial southern Finland over the 
country as a whole might only be temporary. 

Mass Media 

Finland's first newspaper, the Swedish-language Tidningar Utgifne 
A/Et Sdllskap i Abo, was established in 1771 in Turku. A Finnish- 
language journal, Suomenkieliset Tieto-Sanomat, was created in the 
same town in 1775. Neither paper survived long, however, and 
it was not until the next century that regularly published newspapers 
appeared in Finland. Still in existence today are Abo Underrdttelser, 
founded in Turku in 1824, and Uusi Suomi, launched in Helsinki 
in 1847 (see table 21, Appendix A). 

The latter half of the nineteenth century saw the appearance of 
many newspapers. All the political parties formed in these years 
and in the early twentieth century had their own newspapers, and, 
as a result, most Finnish papers were partisan until after World 
War II. After independence in 1917, there was another upsurge 
in the number of newspapers published; a high point, never since 
surpassed, was reached in 1930 when Finns could choose from 123 
newspapers, each published at least three times a week. By 1985 
there were ninety-eight such papers, a figure that has remained 
fairly constant since the early 1960s. Totad circulation of papers 
of this type, twelve of which were in Swedish, amounted to about 
three million by the mid-1980s. In addition, there were about 160 
papers that appeared once or twice a week. One United Nations 
(UN) study ranked Finland fourth in the world for per capita cir- 
culation, and surveys have found that over 90 percent of Finns 



269 



Finland: A Country Study 

read papers regularly, 60 percent of Finns viewing them as the most 
useful source of information. 

Finns preferred to have their papers delivered to their homes 
in the early morning, and for this reason there were only two eve- 
ning papers in the country, Ilta-Sanomat and Iltalehti, both printed 
in Helsinki. Another reason for low newsstand sales in Finland was 
that no taxes were levied on newspapers and magazines received 
via subscription. 

Most localities were served by only one newspaper, but by the 
mid-1980s Helsinki had about a dozen, and its newspapers, which 
constituted only one-eighth of the country's total, accounted for 
one-third of national circulation. Seven of the Helsinki papers were 
among the twelve largest Finnish papers. Although many of Fin- 
land's papers were published in Helsinki, there was little concen- 
tration of press ownership, and there were no dominant newspaper 
chains, with the possible exception of the firm Sanoma that owned 
the two papers with the largest circulation, Helsingin Sanomat and 
Ilta-Sanomat. 

In contrast to the other Nordic countries, the number of 
newspapers in Finland has remained fairly constant, and there was 
even a slight upturn in the 1980s. This steadiness was caused, at 
least partly, by the government program of general and selective 
support. General support was intended for the press as a whole, 
magazines included; it involved not taxing subscriptions and 
essential materials, such as newsprint, and arranging for low postal 
rates. Selective support, designed to guarantee the survival of the 
party press, consisted of partial subsidies for distribution and 
telecommunications costs and direct lump-sum payments to papers 
in accordance with the number of representatives their parties had 
in the Eduskunta. 

Despite these efforts to encourage a varied party press, the num- 
ber of independent papers rose sharply after World War II, 
increasing from 38 percent in 1962 to 64 percent in 1985. The num- 
ber of nonsocialist party papers decreased most, but papers of this 
type still had more than twice the circulation of socialist papers. 

Most Finnish newspapers were served by the country's principal 
news agency, the Finnish News Agency (Suomen Tietotoimisto — 
STT), which was owned by the leading newspapers and the state- 
run Finnish Broadcasting Company (Yleisradio — YLE). STT was 
connected to many of the world's news agencies, and it had an 
extensive network of domestic correspondents. Some newspapers, 
however, had direct contacts with foreign news agencies. There 
were also agencies, run by political parties, that supplied subscrib- 
ers with political news and articles. Agencies of this type were 



270 



Government and Politics 



Kesk's Uutiskeskus (UK), the KOK's Lehdiston Sanomapalvelu 
(LSP), the SDP's Tyovaen Sanomalehtien Tietotoimisto (TST), 
the SKDL's Demokraattinen Lehtipalvelu (DLP), and the SFP's 
Svensk Presstjanst (SPT). 

By the mid-1980s, there were about 1 ,200 magazines being pub- 
lished regulcirly, printing a total of about 20 million copies a year. 
The most popular subscription magazine in the mid-1980s was Me, 
pubHshed biweekly in Helsinki for Finnish consumer societies, fol- 
lowed by the Finnish version of Reader's Digest and by numerous 
family and general interest magcizines. The magazines with the larg- 
est printings were those distributed free at banks, retail stores, and 
other businesses. 

Subscription magazines, like newspapers, enjoyed general sup- 
port from the government in the form of lower taxes and postal 
rates. In the late 1970s, selective government support was in- 
troduced to assist those magazines which, without the aim of finan- 
cial gain, sought to inform the public about cultural, scientific, 
religious, and social concerns. By the mid-1980s, several dozen of 
these so-called ''magazines of opinion" were receiving state aid. 

Finland's state radio and television company, the YLE, was 
founded in 1926, and it began television broadcasting in 1958. It 
was a stock company, with 99.2 percent of its stock owned by the 
government and the remainder owned by fifty- seven stockholders. 
As a stock company, it was independent of the state budget. It did 
not monopolize the airwaves, but sold a portion of its broadcast- 
ing time, a maximum of 18 percent, to a private television com- 
pany, Mainos-TV-Reklam (MTV). This arrangement had been 
in effect since 1958, when the YLE first began television transmis- 
sions. Beginning in 1973, Finland also had cable television, cen- 
tered in the major urban areas, which by the mid-1980s reached 
about 100,000 homes. It was expected that Finns and the residents 
of the other Nordic countries would be able to see each other's tele- 
vision broadcasts via satellite sometime in the early 1990s. 

In the mid-1980s, the YLE employed nearly 5,000 persons; each 
year it broadcast about 5,000 hours of television programming — 
1,000 hours of which was rented by MTV. Since late 1986, the 
YLE's television division has consisted of three channels (TV 1, 
TV 2, and TV 3). The YLE produced about 1,400 hours of 
television itself; the remaining time was filled by programs pur- 
chased abroad. Swedish-language programming amounted to a 
little more than 500 hours, about 60 percent of which appeared 
on TV 1. 

In the mid-1980s, about 20 percent of television broadcast time 
was devoted to news and current events, another 20 percent to 



271 



Finland: A Country Study 

documentaries, the same amount again to sports and light enter- 
tainment, 16 percent to television serials, and 12 percent to films. 
Imported programs were shown in their original languages with 
subtitles. The YLE had coproduction arrangements with many for- 
eign companies, mainly those of Eastern Europe, Western Europe, 
and the United States. Finns, 81 percent of them on a daily basis, 
watched an average of two hours of television a day; 28 percent 
held it to be their most important source of information. 

The YLE's radio division broadcast about 21,000 hours annu- 
ally and consisted of three sections — Network 1, Network 2, and 
the Swedish Program. Network 2 broadcast around the clock. The 
other two stations broadcast from early in the morning until airound 
midnight. Somewhat under half of these radio programs were 
broadcast on a regional or local level from the company's nine local 
stations, eight of which sent Finnish-language progranmiing. About 
20 percent of radio programming was devoted to news and cur- 
rent events, another 20 percent to general cultural and public service 
programs, and 40 percent to all varieties of music. In addition to 
its national broadcasts, each year the company transmitted about 
13,500 hours — in Finnish and in other languages — to listeners, 
abroad. Private radio stations first appeared in 1985, and they 
existed in a score of municipalities by the late 1980s. Firms listened 
to the radio an average of two hours daily, and 70 percent of them 
listened every day. Twenty- three percent of the population held 
the medium to be their most important source of information. 

The YLE, having been granted its broadcasting concession by 
the government, was obliged to present progr2imming that was 'Tac- 
tual and fair," provided wholesome entertainment, strengthened 
popular education, and infringed on no one's rights. A commit- 
tee, appointed in 1979 to study new legislation for radio and tele- 
vision broadcasting, concluded in 1984 that the YLE's programs 
should be marked by truthfulness, pluralism, and relevance to the 
lives of the viewers, and that it should further the basic rights and 
values of the country's citizens. The Administrative Council, the 
members of which were appointed by the Eduskunta in accordance 
with each party's parliamentary strength, was responsible for realiz- 
ing these objectives. Three program councils, the members of which 
were appointed by the Administrative Council and according to 
the political composition of the Eduskunta, were involved in decid- 
ing what was to be broadcast. The upper management of the YLE 
was also somewhat politicized in the belief that this would help to 
guarantee that all viewpoints were adequately aired during broad- 
casting time. MTV's programming, including the news broadcasts 
that it began in 1981, was also supervised by the councils. This 



272 



Government and Politics 



system of control, while occasionally subject to heavy-handed lapses 
of judgement, was generally conceded to have brought about 
programming that broadly mirrored the country's political culture 
as a whole. 

Article 10 of the Constitution Act of 1919 guarantees freedom 
of speech and "the right of printing and publishing writing and 
pictorial presentations without prior interference by anyone." 
International surveys of Finnish journalism have found it to be of 
a high standard and wholly comparable with that of other Western 
nations. The desire for a press reflecting all currents of Finnish 
political life has been given concrete expression in government 
financial support for political newspapers and journals of opinion. 
Legislation from 1966 protected the confidentiality of sources, in 
that it allowed journalists to refuse to reveal the identity of sources 
unless such disclosure would solve a serious crime, i.e., one call- 
ing for a sentence of six or more years. In 1971 this protection was 
extended to television journalists as well. 

Information was readily available in Finland. Ten major pub- 
lishing firms, two of them specializing in Swedish-language books, 
and numerous smaller houses published some 8,000 new titles each 
year. This was an extraordinary figure for a small country, espe- 
cially one the languages of which were not widely known abroad. 
Finns were able to buy books published anywhere in the world, 
and local firms that published the samizdat, or underground, liter- 
ature from the Soviet Union allowed Finns to be well acquainted 
with the opposition groups of their eastern neighbor. 

According to the distinguished Finnish journalist and former 
diplomat. Max Jakobson, Finnish journalism did not possess an 
adversarial spirit and a tradition of aggressive reporting to the same 
degree as the American press. Also on occasion it was noted that 
the politicization of YLE broadcasting meant that television jour- 
nalists sometimes remembered the political party from which they 
came better than they did their duty to inform the public objec- 
tively. In consonance with the tone of Finnish foreign policy, press 
and television criticism of the superpowers' foreign policies was 
muted to some degree. Finnish press discussions of the failures of 
the Soviet Union could be frank, but they were couched in gentler 
tones than was true in some other countries. 

A reminder of the sensitive years just after World War II, when 
Finland's survival as an independent nation was not assured, was 
a 1948 addition to the Penal Code that threatened a prison term 
of up to two years for anyone who damaged Finnish relations with 
a foreign power by means of defamatory journalism. Serious as 



273 



Finland: A Country Study 

this penalty appeared, only the president could decide if a jour- 
nalist seen guilty of such defamation should be prosecuted. Although 
not applied for decades, the clause continued to be an embarrass- 
ment for Finns. Government officials, when called upon to com- 
ment on the clause, stressed the value of a free press and the lack 
of censorship, noted Finland's good relations with all countries, 
acknowledged that there had been in the past some "self- 
censorship" of the press with regard to the Soviet Union, but 
pointed out that the clause had not been applied for decades. Since 
World War II, leading Finnish politicians have also occasionally 
exhorted the press to be more responsible in its reporting on for- 
eign policy issues; there were several such calls by Koivisto in his 
first years in office. Such political tutelage was by the mid-1980s, 
however, no longer viewed as appropriate for a modem democratic 
state. 

Finnish media were also subject to some popular controls. The 
Press Law of 1 9 1 9 gave the right of correction to anyone who held 
that material printed about him in a periodical was incorrect or 
offensive. The publication was obliged to grant the injured party 
an equal amount of space within two days after receipt of the state- 
ment. Failure to do so could result in a fine. Finns could also turn 
to the Council for Mass Media Qulkisen Sanan Neuvosto — ^JSN), 
which was founded in 1968 to promote journalistic ethics. This body 
examined each complaint submitted to it and decided on its merits. 
Between 1969 and 1978, the council received several hundred quer- 
ies; it found about a quarter of them justified and recommended 
to the criticized journal or station that it issue an unedited rejoinder 
from the injured party. 

Films were subject to censorship in Finland according to a law 
from 1965 that had been enacted by the elaborate procedure re- 
quired for legislation seen as being an exception to the Constitu- 
tion. In this case, there was an exceptional curtailment of the 
constitutional right of freedom of information. The law dealt only 
with films shown for commercial purposes, and it forbade those 
that offended good morals, were brutalizing or injurious to men- 
tal health, endangered public order and the nation's defense, or 
harmed Finland's relations with other countries. The Film Cen- 
sorship Board was set up to administer the law, and its decisions 
could be appealed up to the Supreme Administrative Court. Of 
2,688 films reviewed between 1972 and 1983, some 227 were for- 
bidden in their entirety. Of these, nearly all were rejected for rea- 
sons of morality or potential danger to mentsd health, and 2 percent 
because they could hurt Finland's external relations. The most noted 
of these films was the British- Norwegian coproduction, "One Day 



274 



Government and Politics 



in the Life of Ivan Denisovich," based on the eponymous novel 
by Aleksandr Solzhenitsyn. Several films from the German 
Democratic Republic (East Germany) were banned after having 
been judged potentially offensive to the Federal Republic of Ger- 
many (West Germany). 

Foreign Relations 

Finnish foreign policy is aimed at preserving the nation's politi- 
cal and territori2il integrity and safeguarding the continuity of its 
national existence. Geographical reality — having the Soviet Union 
as a neighbor, and defeat in World War II led Finland to adopt 
a postwar national security policy of maintaining its freedom of 
action by dissociating itself from the conflicts of major powers. The 
main feature of contemporary Finnish policy, therefore, is neu- 
trality. As the offici2d political doctrine, nonadignment has helped 
in the establishment of friendly relations with other countries regard- 
less of their political systems. 

Within the framework of Finnish neutrality, there are three 
important policy orientations: a special relationship with the Soviet 
Union; a traditional policy of close collaboration with the other 
Nordic countries — Sweden, Norway, Denmark, and Iceland; and 
an active policy as a member of the UN. 

Neutrality 

Finland, independent only since 1917, does not have a long tra- 
dition of neutrality. In the interwar period, it declared itself neu- 
tral, but its foreign policy was not neutral enough to satisfy the 
security concerns of the Soviet Union, and Finland was drawn into 
World War II. The years immediately after the war were taken 
up by the country's struggle to survive as an independent nation. 
The treaties of 1947 and 1948, which confirmed the existence of 
a Soviet military base on Finnish territory and created a defensive 
alliance with the Soviet Union, seemed to preclude Finnish neu- 
trality (see The Cold War and the Treaty of 1948, ch. 1). 

The Treaty of Friendship, Cooperation, and Mutual Assistance 
(FCMA) of 1948 mentioned in its preamble, however, Finland's 
desire to remain outside the conflicts of the great powers and to 
maintain peace in accordance with the principles of the UN. A first 
example of the Finnish policy of avoiding entanglements in super- 
power disputes was the decision in early 1948 not to participate 
in the European Recovery Program, also known as the Marshall 
Plan. Finnish rejection of the much-needed aid was caused by Soviet 
contentions that the program was an effort on the part of the United 
States to divide Europe into two camps. 



275 



Finland: A Country Study 

In the late 1940s, Finland joined the General Agreement on 
Tariffs and Trade (GATT — see Glossary) and the World Bank (see 
Glossary), participating in their economic programs, but avoid- 
ing any political implications of membership that could be seen 
by the Soviets to link the country to the West. Finland also stayed 
out of the discussions of the period about the formation of a Nor- 
dic defense union. 

During these early years after World War II, there were few offi- 
cial Finnish statements about neutrality, but in a speech in 1952 
Prime Minister Kekkonen held that the FCMA treaty presupposed 
a kind of neutrality for his country. In 1955 a major impediment 
to Finnish neutrality was removed by the closing of the Soviet mili- 
tary base located near Helsinki, and in the following years leading 
Soviet officials praised the neutrality of their neighbor. In 1955, 
too, Finland was able to join the UN and the Nordic Council, acts 
that reduced its isolation and brought it more fully into the com- 
munity of nations. 

By the early 1960s, Finnish neutrality was recognized by both 
the West and the East, and the country entered a more confident 
period of international relations when it began practicing what came 
to be officially termed an active and peaceful policy of neutrality. 
Finland participated in local and in global initiatives aimed at creat- 
ing conditions that allowed nations to avoid violence in their rela- 
tions with one another. As President Kekkonen noted in 1965 in 
an often-quoted speech, Finland could "only maintain its neutrality 
on the condition that peace is preserved in Europe." 

An essential element of Finland's active neutrality policy was 
the concept of a Nordic Nuclear-Weapons-Free Zone (Nordic 
NWFZ), first introduced by Kekkonen in May 1963 against the 
background of a Europe increasingly armed with nuclear weapons. 
The Finnish president proposed the creation of a zone consisting 
of Finl2ind, Sweden, Norway, Denmark, and Icelcind. Their de facto 
nuclear-weapons-free status was to be formalized by the creation 
of a Nordic NWFZ that would remove them somewhat from the 
strategic pl2ins of the superpowers. The zone idea was based on 
the supposition that, as these countries had no nuclear weapons 
in their territories, they might avoid nuclear attacks from either 
of the two alliances, whereas the presence of nuclear weapons would 
certainly invite such attacks. 

The Nordic NWFZ idea was not realized at the time it was ini- 
tiadly proposed. A major impediment was the membership of Den- 
mark and Norway in the North Atlantic Treaty Organization 
(NATO) and hence their pledge to consider the deployment of 
nuclear weapons on their territories in a time of crisis. Despite its 



276 



President Koivisto with President Ronald Reagan at the White House, 

September 1983 
Courtesy The White House (Pete Souza) 

lack of success, the zone proposal remained part of Finnish for- 
eign policy, and in 1978 it was reintroduced in an altered form 
in the light of new developments in weapons technology. In Kek- 
konen's opinion, the cruise missile made the use of nuclear weapons 
in war more likely. His new Nordic NWFZ proposal contained 
the concept of a negative security guarantee, according to which 
the superpowers would bind themselves to refrain from attacking 
with nuclear weapons those countries belonging to the zone. 

The zone proposEd has since become a permanent part of secu- 
rity discussions in Nordic Europe, with support from a variety of 
quarters. President Koivisto declared his firm support for the zone 
propos2d in a speech at the UN in 1983, and in 1985 a Nordic 
parliamentary group convened in Copenhagen to discuss the idea 
and to set up a commission to study it. 

In addition to the problem of Danish and Norwegian member- 
ship in the Atlantic Alliance, other problems continued to prevent 
the zone's realization. A central question was how, and to what 
extent, the Baltic and Barents seas and the adjacent 2ireas of the 
Soviet Union would be included. The Soviet Union, the only power 
of northern Europe that had nuclear weapons in its arsenal, always 
welcomed the zone proposal but left its participation in the zone 
uncertain. Finnish officials seemed content to hold continued talks 



277 



Finland: A Country Study 

about the zone. Foreign affairs specialists occasionally commented 
that Helsinki was more interested in using discussion of a Nordic 
NWFZ as a means of emphasizing the existing stability of north- 
ern Europe than in the realization of such a zone. 

Another core element of Finland's active policy of neutrality was 
the country's participation in arms control and disarmament 
initiatives. In 1963 Finland signed the Nuclear Test Ban Treaty, 
prohibiting nucleair testing underwater, above ground, and in outer 
space; and in 1968 it approved the Treaty on the Non-Proliferation 
of Nuclear Weapons. It was the first country to form an agree- 
ment with the International Atomic Energy Agency concerning the 
peaceful use of nucle2ir power. In 1971 Finland signed the treaty 
banning the placement of nuclear weapons on the world's seabed, 
and in 1975 it joined in the prohibition of the development, produc- 
tion, and stockpiling of biological weapons. Since the early 1970s, 
Finnish scientists have been developing technology for the detec- 
tion of chemical weapons, and since the mid-1970s, they have been 
engaged in perfecting a global seismic verification station system. 

Helsinki was the site for some of the Strategic Arms Limitation 
Talks (SALT), and in 1973 and 1975 Finland was the driving force 
behind the Conference on Security and Cooperation in Europe 
(CSCE) and the host of its first and third meetings. The signing 
of the Final Act of the CSCE in Helsinki in 1975 was the high point 
of the country's policy of active neutrality. The signed document 
recognized the legitimacy of neutrality as a foreign policy, a point 
demonstrated by Finland's hosting the conference. The country 
has continued to work as a member of the neutral and nonaligned 
group at later CSCE meetings, where the emphasis has been on 
the formation of confidence-building and security-building mea- 
sures (CSBM). The fourth CSCE meeting was scheduled to take 
place in Helsinki in the spring of 1992. 

Soviet Union 

Two hard-fought wars, ending in defeat and in the loss of about 
one-tenth of Finland's land area, convinced some leading Finnish 
politicians by the end of World War II that the interwsir policy of 
neutral distance from the Soviet Union had been mistaken and must 
be abandoned if the country were to survive as an independent 
nation (see The Cold War and the Treaty of 1948, ch. 1). Juho 
Paasikivi, Finland's most prominent conservative politician and 
its president from 1946 to 1956, came to believe that Finnish for- 
eign policy must center on convincing Soviet leaders that his country 
accepted, as legitimate, Soviet desires for a secure northwestern 



278 



Government and Politics 



border and that there was no reason to fear an attack from, or 
through, Finland. 

The prehminary peace treaty of 1944, which ended the Con- 
tinuation War, and the Treaty of Paris of 1947, which regulated 
the size and the quality of Finland's armed forces, served to pro- 
vide the Soviets with a strategically secure area for the protection 
of Leningrad and Murmansk. The deterioration of superpower 
relations, however, led the Soviets to desire a firmer border with 
the gradually emerging Western bloc. In February 1948, Finnish 
authorities were notified by Soviet officials that Finland should sign 
a mutual assistance treaty with the Soviet Union. 

The treaty that Finnish and Soviet negotiators worked out and 
signed in April 1 948 differed from those the Soviets had conclud- 
ed with Hungary and Romania. Unlike those countries, Finland 
was not made part of the Soviet military alliance, but was obliged 
only to defend its own territory if attacked by Germany or by coun- 
tries allied with that country, or if the Soviet Union were attacked 
by these powers through Finnish territory. In addition, consulta- 
tions between Finland and the Soviet Union were required if the 
threat of such an attack were established. According to the FCMA 
treaty, Finland was not bound to aid the Soviet Union if that coun- 
try were attacked elsewhere, and the consultations were to be be- 
tween sovereign states, not between military allies. Just what 
constituted a military threat was not specified, but the right of the 
Finns to discuss the posited threat and how it should be met, that 
is, to what extent military assistance would be required, allowed 
Finnish officials room for maneuver and deprived the treaty of an 
automatic character. 

Since its signing, the treaty has continued to be the cornerstone 
of Finnish relations with the Soviet Union; that both found it satis- 
factory was seen in its renewail and extension in 1955, 1970, and 
1983. For the Soviet Union, the FCMA treaty meant greater secu- 
rity for the strategically vital areas of Leningrad cind the Kola Penin- 
sula. Any attack on these areas through Finland would meet first 
with Finnish resistance, which many observers believed would slow 
an offensive appreciably. The prohibition of Finnish member- 
ship in an alliance directed against the Soviet Union meant hostile 
forces could not be stationed within Finland, close to vital Soviet 
installations. 

Finland's neutral status had an effect on the Nordic area as a 
whole. Its special relationship with the Soviet Union reduced pres- 
sure on Sweden and eased that country's burden of maintaining 
its traditional neutrality. The consequent lowering of tensions in 
the region allowed Norway and Denmark NATO membership, 



279 



Finland: A Country Study 

although each of these countries estabUshed certain restrictions on 
the stationing of foreign troops and the deployment of nuclear 
weapons on their soil. The interdependence of security postures 
in northern Europe, sometimes referred to as the Nordic Balance, 
has removed the region somewhat from the vagaries of the Cold 
War over the last few decades. The Soviets have closely monitored 
developments in the area, but their basic satisfaction with the secu- 
rity situation that has prevailed there has zdlowed Finland to sur- 
vive as an independent country, bound to some degree to the Soviet 
Union in defense matters, but able to maintain its democratic 
institutions and its membership in the Western community of 
nations. 

During the years immediately following the signing of the FCMA 
treaty, the Finns complied with their obligation to pay reparations 
to the Soviet Union; the last payment was made in 1952. The 
preceding year the two countries had signed a treaty setting up trade 
between them on the basis of a barter arrangement, which has been 
renewed every five years since then. In 1954 Finland became the 
first capitalist country to sign a scientific and technical agreement 
with the Soviet Union. 

Despite the provisions of Article 6 of the FCMA treaty, which 
enjoined each contracting party from interfering in the domestic 
affairs of the other, Soviet comments on Finnish domestic politics 
were often quite harsh. Soviet attitudes toward Finland softened, 
however, with the death of Joseph Stalin and the advent of better 
relations with the Western powers in the mid-1950s; consequent- 
ly, no objections were raised to the 1955 decisions to admit Fin- 
land to the Nordic Council and to the UN (see Nordic Europe, 
this ch.). Late in the same year, the Soviets gave up their base at 
Porkkala in exchange for an extension of the FCMA treaty, due 
to expire several years after Paasikivi's scheduled retirement in 
1956. Soviet uncertainty about the conduct of his successor made 
Moscow anxious for the treaty's renewal. 

The departure of Soviet troops from Finnish territory removed 
an obstacle to Finland's full sovereignty and to its achievement of 
neutr2ility. In 1956 Nikita Khrushchev, first secretary of the Com- 
munist Party of the Soviet Union (CPSU), spoke for the first time 
of Finnish neutrality. Soviet tributes to Finland's neutrality and 
nonaligned status grew common in the next few years. 

Finnish-Soviet relations were shaken by two crises — the Night 
Frost Crisis of 1958-59 and the more serious Note Crisis of 1961 
(see Domestic Developments and Foreign Politics, 1948-66, ch. 
1). The Note Crisis was a watershed in Finnish- Soviet relations 
in that Kekkonen, whose successful resolution of the crisis made 



280 



Government and Politics 



him the virtual master of Finnish foreign poUcy, and others real- 
ized that in the future Finnish foreign policy ought to be formulat- 
ed only after its effects on Soviet interests had been carefully 
weighed. Another effect of the crisis was that it led to the inaugu- 
ration of a policy of active and peaceful neutrality (see Neutrality, 
this ch.). 

Finnish-Soviet relations since the Note Crisis have been stable 
and unmarked by any serious disagreements. Trade between the 
two countries has remained steady since the 1951 barter agreement. 
In 1967 Finland became the first Western country to set up a per- 
manent intergovernmental commission with the Soviet Union for 
economic cooperation. A treaty on economic, technical, and in- 
dustrial cooperation followed in 1971, as did a long-term agree- 
ment on trade and cooperation in 1977 that, in 1987, was extended 
to be in effect until the turn of the century. The first joint venture 
agreements between Finnish and Soviet firms were also arranged 
in 1987. In 1973 Finland was the first capitalist country to cooper- 
ate closely with the Council for Mutual Economic Assistance 
(CMEA, CEMA, or Comecon — see Glossary) (see Regional Eco- 
nomic Integration, ch. 3). 

The Soviet Union has carefully monitored Finland's adherence 
to the FCMA treaty, and Finland's awareness of this scrutiny has 
influenced Finnish policy. For example, Finland refrained from 
full membership in the European Free Trade Association (EFT A) 
and instead joined the body through an associate membership in 
1961. The entry into a free-trade relationship with the European 
Economic Community (EEC — see Glossary) in 1973 occurred only 
through a carefully orchestrated preliminary plan that included for- 
mal links with Comecon and a special re-election of Kekkonen in 
1974 to assure the Soviets of continuity in Finnish foreign policy. 

Since the Note Crisis, Soviet interference in Finnish domestic 
concerns has been limited to occasional critical comments in the 
Soviet press and from official spokesmen. Clarification about Soviet 
policy toward Finland could be obtained from Soviet officials them- 
selves, or from articles published in authoritative newspapers or 
journals. Since the 1970s, a frequent source of enlightenment about 
the Kremlin's attitudes toward Finland, and about Nordic Europe 
in general, were articles written under the name of Komissarov, 
many of which were commonly believed to have been written by 
lurii Deriabin, a well-placed and knowledgeable Soviet specialist 
on Finnish affairs. As valued indicators of Soviet attitudes, the ar- 
ticles were examined line by line in Finland. Komissarov articles, 
for example, disabused Finnish foreign affairs specialists of the no- 
tion, which they had entertained for a time, that Finland had the 



281 



Finland: A Country Study 

right to determine on its own whether consultations according to 
Article 2 of the FCMA treaty were necessary. A Komissarov arti- 
cle that appeared in January 1984 in a Helsinki newspaper expressed 
the disquieting Soviet view that the passage of cruise missiles 
through Finnish airspace might conceivably mean the need for con- 
sultations. 

Two examples may indicate the restraint exercised by the Soviets 
in their dealings with Finnish affairs since the early 1960s. In 1971 
the Soviet ambassador was recalled from Helsinki after he had be- 
come involved in the internal feuds of the Communist Party of Fin- 
land (Suomen Kommunistinen Puolue — SKP). A suggestion in 
1978 by a Finnish communist newspaper, which was repeated by 
the Soviet chief of staff General Dmitri Ustinov, that Finnish mili- 
tary forces should hold joint maneuvers with Soviet forces was quick- 
ly dismissed by Finnish officials as incompatible with their country's 
neutrality; there was no Soviet rejoinder. 

Finnish foreign policy vis-a-vis the Soviet Union enjoyed 
widespread support from the Finnish people. Polls in the 1980s con- 
sistently measured an approval rate of over 90 percent. Another 
proof of the acceptance of the Paasikivi-Kekkonen Line was that 
foreign policy played virtually no part in the parliamentary elec- 
tions of 1983 and 1987. From the Soviet side, comments on these 
elections were neutral, with no hints of preferred victors. 

Nordic Europe 

Finland is an integral part of Nordic Europe. With the excep- 
tion of a small Swedish-speaking minority, the country is ethni- 
cally distinct from the Scandinavian countries, but the 700 years 
that Finland was part of Sweden gave it a Nordic inheritance that 
survived the century during which Finland was an autonomous 
state within the Russian Empire. During the interwar period, it 
entered into numerous agreements with the other states of Nordic 
Europe. After World War II, relations resumed, but with caution 
owing to the tensions of the Cold War. Finland could undertake 
no initiatives in international relations that might cause the Soviet 
Union to suspect that Finland was being drawn into the Western 
camp. 

The gradual relaxation of superpower tensions meant that in 1955 
Finland could join the Nordic Council, three years after its foun- 
dation. The Nordic Council was an organization conceived to fur- 
ther cooperation among Norway, Sweden, Denmark, and Iceland. 
Meeting once a year for a week in one of the capitals of the mem- 
ber countries, the council was an advisory body, the decisions of 
which were not binding; it did carry considerable weight, however, 



282 



Government and Politics 



as the delegates at the annual meetings were frequently leading 
politicians of the countries they represented. At the insistence of 
Finland, security matters were not to be discussed, and attention 
was directed rather to economic, social, and cultural issues. Unlike 
the Europe2in Community (EC — see Glossary), the Nordic Coun- 
cil was not a supranational organization, and membership in the 
council did not affect Finland's status as a neutral nation. 

The Treaty of Helsinki of 1962 gave birth to the Nordic Con- 
vention on Cooperation, which defined the achievements and goals 
of the regional policy of increased interaction. This agreement was 
followed by the formation in 1971 of the Nordic Council of 
Ministers, which instituted a formal structure for frequent meet- 
ings of the region's cabinet ministers. The issue at hand determined 
which ministers would attend. In addition to these larger bodies, 
numerous smaller entities existed to further Nordic cooperation. 
A study of the second half of the 1970s found more than 100 such 
organizations. The efforts of these bodies and the many formal and 
informal meetings of Nordic politicians and civil servants stopped 
short of full integration, but they yielded numerous agreements 
that brought Finland and the other Nordic countries closer together. 
This so-called "cobweb integration" has given the citizens of Nordic 
Europe many reciprocal rights in one another's countries. Finns 
were able to travel freely without passports throughout Nordic 
Europe, live and work there without restrictions, enjoy the full social 
and health benefits of each country, and since 1976, vote in local 
elections after a legal residence of two years. Citizenship in another 
of the Nordic countries could be acquired more easily by a Finn 
than by someone from outside the region. 

Economic cooperation did not proceed so smoothly. Nordic 
hopes, in the mid-1950s, of establishing a common market were 
disappointed, and EFT A was accepted as a substitute. An attempt 
in 1969 to form a Nordic customs union, the Nordic Economic 
Union (NORDEK), foundered when Finland withdrew from the 
plan. The withdrawal may have been caused by Soviet concerns 
that Finland could be brought into too close a relationship with 
the EEC via Denmark's expected membership in the Community. 
This setback was mitigated, however, when the Nordic Investment 
Bank began operations in 1976 in Helsinki. The bank's purpose 
was to invest in financial ventures in the Nordic region. 

In the second hadf of the 1980s, Finland continued working with 
its Scandinavian neighbors, being a part, for example, of the Nor- 
dic bloc in the UN and participating in Nordic Third World 
development projects. Finland's Nordic NWFZ proposal was being 
studied and furthered by an inter-Nordic parliamentary committee, 



283 



Finland: A Country Study 

and Finland was always present at the semiannual meeting of Nor- 
dic foreign ministers. 

Western Europe 

Finland had to adjust its foreign policy after World War II to 
the changed international environment; however, it continued to 
enjoy good relations with West European countries, particularly 
in the field of economic cooperation. The country joined economic 
projects such as GATT and the International Monetary Fund 
(IMF — see Glossary), but, wary of arousing Soviet apprehensions 
about potential political ties to the West, did not seek membership 
in the Organisation for European Economic Co-operation (OEEC). 
Through a clever device, however, Finland did manage to partici- 
pate in the trade benefits provided by the OEEC's European Pay- 
ments Union: in 1957 Finland formed its own body, the Helsinki 
Club, which was subsequently joined by all OEEC countries. In 
1961 , for imperative economic reasons, Finland worked out a spe- 
cial relationship with EFTA after complex negotiations. Finland's 
relationship, an associate membership in the body, became feasi- 
ble after the Soviet Union agreed that it was compatible with the 
Finnish policy of neutrality and after tariff arrangements ensured 
the continuity of Finnish- Soviet economic cooperation. A more sta- 
ble world meant that in 1969 Finland was able to join the OEEC's 
successor, the Organisation for Economic Co-operation and 
Development (OECD). In 1973 Helsinki, in a balancing effort, 
signed agreements with both the EEC and Comecon and was given 
a special status with both organizations. 

Another subtle act of diplomatic balancing was Finnish treat- 
ment of the thorny question of what kind of relations it should have 
with the two German states. To recognize either would antagonize 
one of the superpowers. The Finnish solution was to establish two 
separate trade missions, one in each of the Germanics. This 
arrangement allowed diplomatic relations and alienated no one. 
Once the two German states recognized each other in 1972, Fin- 
land was able to establish normal diplomatic relations with each 
of them. 

The years since the early 1970s have seen a steady normaliza- 
tion of Finland's relations with Western Europe. In the 1980s, Fin- 
nish trade with the region accounted for about 60 percent of its 
exports; the country participated in European economic and 
research endeavors like Eureka and the European Space Agency 
(ESA); and 1986 saw full Finnish membership in EFTA. In addi- 
tion, by the end of 1988 zdl obstacles appeared cleared for Finland's 



284 



Government and Politics 



membership in the Council of Europe (see Glossary) the following 
year. 

The increasing integration of the EC, however, presented 
problems for Finland and for EFTA's other neutral states. The 
supranational character of the EC , which was always incompati- 
ble with Finnish neutrality, became even more so with the signing 
in 1985 of the EC's Single European Act. The act aimed at for- 
eign policy cooperation among members, and it therefore made 
Finnish membership in the EC inconceivable. Exclusion from the 
EC, however, could threaten Finland's export-based economy if 
the ''internal market" that the EC hoped to have in place by 1992 
led to trade barriers directed against nations outside the Commu- 
nity. The late 1980s and the early 1990s were certain to be a time 
of intensive Finnish dicussion on how this challenge was to be met. 

United States 

The United States recognized Finland as an independent state 
in 1919. In that year, the United States assisted Finland with deliv- 
eries of food through an organization led by Herbert Hoover. Since 
then assistance has been in the form of loans, all of which have 
been repaid. This has contributed to the development of friendly 
relations between the countries. The American public expressed 
great sympathy for Finland during the Winter War, and, although 
the United States ambassador was recailled in June 1944 after Fin- 
land's decision to continue the war against the Soviet Union, the 
United States did not declare war on Finland (see The Winter War, 
ch. 1). In the postwar period, Finnish- American relations have been 
exceedingly cordial. Even though political considerations did not 
allow Finland to participate in the Marshall Plan after World War 
II, in the immediate postwar years, Finland received about US$200 
million in credits from the United States to help rebuild its indus- 
trial base. 

Both Kekkonen and Koivisto paid state visits to the United States, 
and United States presidents have occasionally expressed their sup- 
port for Finnish neutrality. In early 1983, however, the supreme 
commander of NATO forces in Europe, United States general Ber- 
nard Rogers, expressed uncertainty about the Finns' desire to 
defend themselves. His press conference remarks caused much con- 
sternation in Finland. Other military officials have since praised 
Finland's defense readiness; among them was United States admiral 
William Crowe, who paid Finland an official visit in 1986 as chair- 
man of the Joint Chiefs of Staff. 

United Nations and the Third World 

Because Finland had fought with the Axis powers during World 



285 



Finland: A Country Study 

War II, it was ineligible for charter membership in the UN in 1945. 
Finland applied for membership in 1947, but Cold War disagree- 
ments among the great powers on UN admissions policies delayed 
Finland's entry until 1955. 

Finland had not been very enthusiastic about membership in the 
UN in the 1945 to 1955 period. The country tried to pursue the 
Paasikivi policy of passive and cautious neutrality and feared that 
joining the UN would be incompatible with its nonaligned status. 
A strict interpretation of the UN charter made membership in it 
incompatible with neutrality. According to Article 25 of the chart- 
er, members of the UN are obliged to follow the decision of the 
Security Council in applying economic or military sanctions against 
other member states. 

Since becoming a member, however, Finland has been a com- 
mitted and active participant in accordance with its official foreign 
policy of a peaceful and active neutrality. In the late 1960s, it was 
a member of the Security Council, and one of its UN officials, the 
diplomat and historian Max Jakobson, was a strong contender for 
the post of secretary general. His candidacy is said to have failed 
because of reservations on the part of the Soviet Union. In the fall 
of 1988, Finland was reelected to the Security Council for a two- 
year term, and it was expected to assume the council's chairman- 
ship in 1990. 

There have been two main lines of Finnish policy in the UN. 
The first is that Finland avoids any political or economic confron- 
tation in which the interests of the superpowers are direcdy involved. 
This policy explains why Finland has refrained over the years from 
condemning Soviet actions, most recently the Soviet military 
presence in Afghanistan. Finnish officials hold that their country 
can be more effective on the internation2il level if it has good rela- 
tions with all countries. (They commonly explain that Finland wish- 
es to work as a doctor rather than as a judge.) The second current 
of Finland's UN policy is that country's role as part of the Nordic 
bloc within the orgcinization. FinlEind consults and collaborates close- 
ly with other Nordic members, generally voting with them, par- 
ticipating with them in aid projects to the Third World through 
the United Nations Development Programme (UNDP), or being 
part of the UN forces sent to troubled areas, Finnish forces have 
taken part in every UN peacekeeping mission since the early 1960s. 
In addition, the country maintains a permanent military force avail- 
able to the organization (see United Nations Peacekeeping Activi- 
ties, ch. 5). Finnish aid to the Third World has not been so extensive 
as that of the other Nordic countries. Finland, for example, has 
never met the goal of contributing 0.7 percent of its gross national 



286 



Government and Politics 



product (GNP — see Glossary) to Third World development, and 
critics have charged that Finland gets a "free ride" from the 
achievements and good reputations of Sweden, Norway, and Den- 
mark. Efforts were underway in the 1980s, however, to come closer 
to this figure. The foreign aid programs in which Finland was 
involved were not only multilateral, but, with regard to a few 
selected countries, were carried out on a one-to-one basis. Finland's 
record as a provider of asylum for refugees did not always match 
the records of the other Nordic countries. A quota system institut- 
ed in 1985 provided for the acceptance of 100 refugees a year. Criti- 
cism of this figure led to the quota's increase to 200 a year in 1987, 
and in mid- 1988 Finnish officials decided to admit 300 refugees 
that year. As of late 1988, there were about 1,200 refugees in Fin- 
land, nearly all of them from the Third World. 



An excellent introduction to Finnish political life is David Art- 
er's Politics and Policy-Making in Finland. The same author's The Nordic 
Parliaments presents in great detail the workings of the Eduskunta, 
the Landsting, and the Nordic Council. Somewhat dated, but still 
useful, is Ja2ikko Nousiainen's classic The Finnish Political System. 
The second edition of The Finnish Legal System, edited by Jaakko 
Uotila, will meet the needs of many readers on this subject; in ad- 
dition, it has expert surveys of various Finnish political institutions. 
Small States in Comparative Perspective: Essays for Erik Allardt, edited 
by Risto Alapuro et al, contains a number of valuable 2irticles. Klaus 
Tornudd's Finland and the International Norms of Human Rights ex- 
amines Finnish legal protections for human rights and provides 
much information about law and the media. 

Stimulating brief accounts of Finland's unique international po- 
sition are George Maude's The Finnish Dilemma: Neutrality in the 
Shadow of Povuer and Max Jakobson's Finnish Neutrality. Roy Alli- 
son's more recent Finland's Relations with the Soviet Union, 1944-84 
is also very useful. Foreign Policies of Northern Europe, edited by Bengt 
Sundelius, treats the Nordic region as a whole, yet it will help the 
reader seeking more specific information about many aspects of 
Finnish foreign relations. The Nordic quarterly Cooperation and Con- 
flict often contains excellent articles that de2il with Finnish foreign 
relations, as does the Yearbook of Finnish Foreign Policy, published 
by the Finnish Institute of Foreign Affairs. (For further informa- 
tion and complete citations, see Bibliography.) 



287 



Chapter 5. National Security 



Escutcheon in front of Ministry of Defense, Helsinki 



In the strategically vital region of northern 
Europe, Finland and Sweden together form a large expanse of neu- 
tral territory between the two military blocs of the North Atlantic 
Treaty Organization and the Warsaw Pact. Finnish defense poli- 
cy in the late 1980s was based on the principle that, while not directiy 
threatened from any source, Finland was in danger of becoming 
involved in the event of a larger conflict between the great pow- 
ers. In such an eventuality, Finnish territory might be violated in 
military operations targeting objectives beyond Finland's borders. 
If, as seemed most likely, the potenticd invader was primarily en- 
gaged elsewhere, determined Finnish defensive action should have 
a realistic chance to succeed, or at least to inflict severe damage 
sufficient to discourage potential incursions. 

Finland's standing forces were modest in number (about 35,000), 
both as a requirement of the 1947 Treaty of Paris and as a result 
of the economic constraints on a nation of fewer than 5 million 
inhabitcints. The treaty also prohibited Finland from acquiring arms 
of an offensive nature. Nevertheless, a conscription system provided 
military training for nearly 2dl young men, and, in an emergency, 
a reserve force of former conscripts could put up to 700,000 men, 
nearly 15 percent of the country's population, in the field. When 
mobilized, this sizable fighting force, aided by natural defenses of 
deep forests, marshes and lakes, and a bitter winter climate, could 
present a formidable chadlenge to any invading army. 

Historically, Finland has been a source of strategic concern to 
the Soviet Union because of its proximity to the densely populat- 
ed, industrialized zone centered on the Soviet Union's second larg- 
est city, Leningrad. Although Leningrad was still important militar- 
ily, by the 1970s the strategic focus had shifted northward, where 
sparsely inhabited Finnish Lapland lies close to the concentration 
of Soviet bases and ports on the Kola Peninsula. Upon the out- 
break of war, these northernmost regions of Europe would, in all 
likelihood, become a key area of conflict. Finland's northern 
defenses, both ground and air, had been reinforced during the 1970s 
and the 1980s to emphasize its determination to prevent Lapland 
from becoming a corridor for attack by one of the military alliances. 

The Finnish military relationship vis-a-vis the Soviet Union was 
governed by the 1948 Treaty of Friendship, Cooperation, and 
Mutual Assistance, which committed Finland to use all of its avail- 
able forces to repel an attack from the West, if necessary with the 



291 



Finland: A Country Study 

assistance of the Soviet Union. Soviet involvement would, however, 
require Finland's assent. To preclude the possibility of the Soviet 
Union's insisting on introducing its forces onto Finnish soil under 
the pretext of a developing threat, Finland deemed it essential that 
the Finnish Defense Forces be perceived as having the capability 
to deny the hostile transit of Finnish territory. The Finnish defense 
posture thus gave considerable emphasis to effective surveillance 
and alertness in order to detect violations of Finnish air space and 
land and sea intrusions in any part of the country. 

Officially, Finnish defense strategy assumed that attack could 
come from any direction; hence, its standing forces were distributed 
throughout the territory. Finland's sensitive relations with Moscow 
precluded a deployment suggesting that the most likely threat was 
along its extended eastern border with the Soviet Union. Neverthe- 
less, a possible scenario was a Soviet crossing of the northern ter- 
ritories of Finland and Sweden to attack North Atlantic Treaty 
Organization bases in northern Norway that threatened the move- 
ment of Soviet fleet units into the Atlantic. 

Finnish strategic doctrine had emerged from the lessons learned 
during the two phases of its conflict with the Soviet Union between 
1939 and 1944 — the Winter War and the Continuation War. The 
Finns' experience of fighting against vasdy superior manpower had 
taught them that set battles with concentrations of forces should 
be avoided. Defense in depth and mobility of forces were neces- 
sary in order to minimize attrition. The emphasis was on smaller 
fighting elements that could, by guerrilla tactics, employ terrain 
and weather to pin down and to divide larger enemy forces, then 
swiftly concentrate their own units for punishing attacks. The ul- 
timate objective was not to win a clear-cut military victory against 
a more powerful opponent but, as in Finland's World War II cam- 
paigns, to inflict sufficient losses on the attacker to persuade him 
that a negotiated settlement was preferable to a continued drain 
on resources. 

Although Finnish first-line units were undergoing moderniza- 
tion in the late 1980s, the Defense Forces as a whole were only 
moderately well equipped for the mission of resisting armed attack 
against or across Finland's territory. Military outlays continued 
to be among the lowest, in relation to national income, of all of 
the developed countries. Nonetheless, the nation was firm in its 
resolve to defend Finnish territory and independence. It was con- 
fident that its military preparedness, combined with the qualities 
of its individual soldiers and its forbidding geography, presented 
a strong deterrent to intervention from any quarter. 



292 



National Security 



Military Heritage 

Although Finland did not achieve full national independence until 
1917, its military traditions went back more than 300 years. As 
a part of the dual kingdom of Sweden and Finland, Finland sup- 
plied the Swedish armies not only with drafted foot soldiers, but 
also with highly qualified officers from the Swedish- speaking 
aristocracy (see The Era of Swedish Rule, c. 1150-1809, ch. 1). 
Contributing as much as one-third of the manpower of the Swed- 
ish armed forces, the Finnish infantry and cavalry distinguished 
themselves at a time when Sweden was playing a decisive role in 
European power politics. The setbacks that Sweden eventually 
suffered in Europe were explained by the Finns, with considera- 
ble justification, as mistakes that had been made by the Swedish 
kings on the political level. The performance of the Finns on vari- 
ous battlefields had justified their reputation for bravery and their 
confidence in their own martial abilities. 

With the decline of Swedish power in the eighteenth century, 
the Finns were called upon to defend the country's borders to the 
east against the traditionsil enemy, Russia. On three major occa- 
sions, Russian armies occupied parts of the country for a number 
of years before eventuzilly being driven out by Finnish and Swed- 
ish forces. When Finland became the Grand Duchy of Finland in 
the Russian Empire in 1809, the Finnish units of the Swedish army 
were disbanded. 

The first indigenous Finnish military elements of three light in- 
fantry regiments were raised at the time of Napoleon's eastward 
drive in 1812, but during most of the nineteenth century, the only 
Finnish military force was a guards battalion paid for by the tsar. 
Finns were specificadly exempted from Russian conscription, but 
more than 3,000 of them, mostly from the aristocracy, served in 
the tsarist armies between 1 809 and 1917 (see The Russian Grand 
Duchy of Finland, 1809-1917, ch. 1). 

The Finnish Military Academy at Hamina continued to turn 
out officers who served with distinction in the Impericd Russian 
Army, a disproportionate number rising to the rank of general. 
Among these graduates was Carl Gustaf Emil Mannerheim, who 
later became the great hero of Finnish resistance and the struggle 
for independence. 

In 1878 the tsar permitted Finland to raise its own national militia 
through a conscription law providing for selection of recruits by 
lot to serve either as regulars or reservists. By the beginning of the 
twentieth century, the Finnish army consisted of eight provincial 
battalions of infantry and a regiment of dragoons, together with 



293 



Finland: A Country Study 

thirty-two reserve companies. In 1901, as part of the Russiflca- 
tion movement, the Russian authorities introduced a military ser- 
vice law obligating Finns to serve in the tsarist army, for four years, 
anywhere within the Russian Empire, Only one regiment of dra- 
goons and one battalion of guards from the Finnish army were to 
be retained; the rest were to be incorporated in the imperial army. 
The new law was met by passive resistance in Finland, and it 
strengthened the Finnish nationalist movement. In a shift of policy 
in 1905, the conscription law was suspended, and Finns were never 
again called upon to serve in Russian uniform. Nevertheless, the 
Russians dissolved the militia, the military academy, cind the guards 
battalion. 

Soon after Finland gained independence in December 1917, a 
nationalistic, middle-class militia known as the White Gucirds, which 
had been secretly established in 1904 and 1905 and which had 
remained underground since then disguised as athletic clubs and 
other groups, was officially proclaimed the army of the Finnish 
government under General Mannerheim. This so-called White 
Army was strengthened and trained by 1,100 officers and noncom- 
missioned officers (NCOs) who had traveled clandestinely to Ger- 
many during World War I and had formed the Twenty- seventh 
Royal Prussian Jaeger Battalion. Returning to Finland, they 
brought back with them urgentiy needed small arms captured from 
the Russians. The White forces were swelled by new conscripts, 
officers of the former Finnish armed forces, Swedish volunteers, 
and Finnish officers who had served in the Swedish and in the Rus- 
sian armies, in addition to the jaegers. After three months of bit- 
ter civil conflict, the White Army of about 70,000 troops defeated 
the Red Guards from the radical wing of the Finnish Social 
Democratic Party, in May 1918. Both sides suffered thousands of 
casualties. In four months, the White Guards had evolved from 
a strongly motivated, but ill- trained, militia into a batde-hardened, 
disciplined national armed force. Although numericziUy superior 
and reinforced by the Russian garrisons in Finland, the Red Guards 
were deficient in equipment, training, and leadership (see The Fin- 
nish Civil War, ch. 1). 

During and after the Civil War, conflict emerged between the 
younger jaeger officers of the Finnish army and the former tsarist 
officers in its upper ranks. When most of the Finnish officer corps 
threatened to resign in 1924 over the dominance of the Russian- 
trained leadership, most of the Russian officers were moved aside 
and the jaeger officers began to occupy the higher echelons, bringing 
the influence of German military doctrine and training methods 
with them. 



294 



National Security 



The new government reinstituted conscription after the Civil War 
and estabUshed a small national army. It also introduced a mobili- 
zation system and compulsory refresher courses for reservists. The 
Finnish Military Academy was reactivated in 1919, and during the 
1920s a reserve officers' school was formed, together with NCO 
schools for various brainches and arms of the service. The Civil 
Guard, a voluntary rightist formation of 100,000 personnel de- 
rived from the White Guards, constituted a local auxiliary. 
Nevertheless, Finland did not succeed in building a strong nation- 
al army. The requirement of one year of compulsory service was 
greater th2in that imposed by any other Scandinavian country in 
the 1920s and the 1930s, but politic2d opposition to defense spend- 
ing left the military badly equipped to resist attack by the Soviet 
Union, the only security threat in Finnish eyes. 

When the Soviets invaded in November 1939, they were met 
by a force of 135,000 Finnish troops organized into 9 divisions. 
In a matter of a few weeks, the Finnish army destroyed large num- 
bers of invading Soviet soldiers. The initial Red Army contingents 
were poorly trained, and they were unprepared for combat under 
severe winter conditions. The Finnish army was able to inflict sharp 
defeats in battles on the Karelian Isthmus and in northeastern Fin- 
land. Momentarily, it looked as if Finland would turn back the 
aggressor and would inflict an astonishing military defeat on its 
great and powerful neighbor. When the Soviet commanders revert- 
ed to a strategy of wearing down the greatly outnumbered Finns 
in Karelia by their overwhelming firepower, however, Finland's 
defeat was inevitable. On March 12, 1940, an armistice yielded 
slighdy more territory to the Soviets than they had initially demand- 
ed in 1939. The Soviets regarded this territory as being vitcd to 
their preparations for a future showdown with Nazi Germany (see 

In the Continuation War, fought by Finland as a cobelligerent 
with Germany from 1941 to 1944, Finnish forces again demon- 
strated their superior qualities. Thanks to the Germans, the army 
was now much better equipped, and the period of conscription had 
been increased to two years, making possible the formation of six- 
teen infantry divisions. The fully mobilized Finnish army of 400,000 
was numerically superior to the opposing Soviet forces, which had 
been thinned to meet the need for troops to resist the German on- 
slaught on the centred front. The Finnish goal was not conquest 
but regaining territories traditionally Finnish. The Finns refused 
German pressure to join in the siege of Leningrad, but they pushed 
80 to 1 60 kilometers into Soviet territory farther north above Lake 
Ladoga before settling for static defensive operations. The Finnish 



295 



Finland: A Country Study 

army continued to occupy this former Finnish area until the major 
Soviet offensive of June 1944. Confined in the losing Axis coali- 
tion, the Finns had to retreat for a second time, and they escaped 
total Soviet invasion and occupation only by entering into a sep2irate 
agreement that obligated them to military action against the retreat- 
ing German armies (see The Continuation War, ch. 1). 

The demobilization and regrouping of the Finnish Defense Forces 
were carried out in late 1944 under the supervision of the Allied 
Control Commission. Following the Treaty of Paris in 1947, which 
imposed restrictions on the size and equipment of the armed forces 
and required disbandment of the Civil Guard, Finland reorganized 
its defense forces. The fact that the conditions of the peace treaty 
did not include prohibitions on reserves or mobilization made it 
possible to contemplate an adequate defense establishment within 
the prescribed limits. The reorganization resulted in the abolition 
of about 15 percent of officer and NCO positions, the adoption 
of the brigade — in place of the division — as the basic formation, 
and the reduction of the term of service for conscripts to 240 days 
(330 days for NCO and for reserve officer candidates). The 
organization of the high command was unchanged, but the minister 
of defense was given slightly more authority in decision making. 
The completion of this reorganization in 1952 established the struc- 
ture within which the modern Defense Forces were to evolve. 

Treaty Commitments Affecting National Security 

Considering the magnitude of the defeat and the blows that were 
dealt to other nations fighting on Germany's side during World 
War II, Finland did not fare badly when the terms for the Treaty 
of Paris were completed on February 10, 1947. With respect to 
national security, the most important parts of the peace treaty were 
the restrictions it put on Finland's armed forces. Part III, Articles 
13 through Article 22, limited the future regular Finnish army to 
34,400 soldiers, the navy to 4,500 individuals, and the air force 
to 3,000. There were also exclusions of equipment of an offensive 
nature, such as bombers, missiles, and submarines. Warships could 
not exceed a combined total of 10,000 tons. The air force could 
acquire up to sixty combat planes, but they were not to include 
bombers or fighter bombers. None of the services was allowed to 
construct, to procure, or to test nuclear weapons. 

The stipulations on the size of the Finnish armed forces were 
included on the demand of Britain, which did not want to accord 
special treatment to Finland. (Limiting provisions also had been 
incorporated into the peace treaties with Romania, Bulgaria, and 
Hungary.) Fears that Finland would soon come within the Soviet 



296 



National Security 



orbit may also have influenced the British demands. The peace 
treaty restrictions have never been interpreted as prohibiting Fin- 
land from training and arming a large reserve force, however. The 
Soviet Union has, on the contrary, been willing to sell Finland 
equipment far in excess of the needs of its standing army. 

Changing geopolitical conditions and weapons technology have 
resulted in an easing of the treaty's restrictions. In spite of the pro- 
hibition against missiles of all types, in 1963 the contracting par- 
ties approved an interpretation of the peace treaty permitting 
Finland to acquire defensive missiles. Finland subsequentiy armed 
itself with naval surface-to-surface missiles (SSMs), antiaircraft mis- 
siles, and antitank missiles. In 1983, following another interpreta- 
tion that the treaty's ban on magnetic underwater mines did not 
prohibit mines of a defensive nature, Finl2ind was permitted to buy 
modern mines from Britain and from the Soviet Union. 

The problems of national defense were also affected by the Treaty 
of Friendship, Cooperation, and Mutual Assistance (FCMA — see 
Appendix B) with the Soviet Union, requested by Joseph Stalin 
in February 1 948 and signed by the Finnish government in April 
of the same year (see The Cold War and the Treaty of 1948, ch. 
1). The most important defense-related clauses were Articles 1 and 
2 , which deal with military cooperation and consultation between 
Finland and the Soviet Union. Other articles deal with noninter- 
ference in the internal affairs of the other state and agreement not 
to enter into an alliance aimed against the other party of the treaty. 

The Finnish government distinguished the FCMA treaty from 
a military alliance by pointing out that its military clauses were 
restricted to situations of attack against Finland or against the Soviet 
Union through Finnish territory. Moreover, according to the lan- 
guage of the treaty, the military assistance to be provided by the 
Soviet Union was not to come into effect automatically; it was to 
require Finland's approval following consultations of the general 
staffs of the two nations. 

The FCMA treaty has been renewed several times, most recendy 
in 1983 for a twenty-year period. The frequent renewals, long before 
the expiration dates, seemed to reflect intense Soviet interest in 
the treaty. Finland has strenuously avoided military consultations 
under the treaty and has never accepted hints by the Soviets that 
the treaty should be the basis for military cooperation and joint 
exercises. Nevertheless, the potential for serious strains with 
Moscow cdways existed over the need for, and the nature of, 
assistance under the treaty (see Soviet Union, ch. 4). 

The Aland Islands have historically served, during conflict in 
the Baltic Sea, as naval bases and as staging and transit areas in 



297 



Finland: A Country Study 



support of offensive operations on land (see fig. 1). In 1921 the 
most important Baltic countries, exclusive of the Soviet Union, con- 
cluded a convention that strengthened the demilitarization of the 
islands originally agreed to in 1856. Under this convention, Fin- 
land could neither fortify the islands nor construct military bases 
in the archipelago, but it could send armed forces there temporar- 
ily in case of a need to restore order or to carry out inspections 
by small nav2il vessels or air reconnaissance. In wartime, the con- 
vention authorized Finland to take necessary measures to repel an 
attack endangering the neutrality of the zone. 

In 1940, under a separate agreement between Finland and the 
Soviet Union, Finland reaffirmed the demilitarization of the islands 
and pledged not to place them at the disposal of any other state's 
armed forces. These commitments were recognized by a clause in 
the 1947 Treaty of Paris stating that the islands were to remain 
demilitarized. In conformity with Finlaind's obligations under these 
agreements, the Coast Guard patrolled the territorial waters of the 
Aland Islands in peacetime. The Defense Forces would exercise 
responsibility for their defense in wartime. 

Geostrategic Situation 

Finland's military importance arises from its geographic posi- 
tion. As a small country, it poses no military threat to its neigh- 
bors, but at times in the past larger powers have considered its 
possession important for their security. The exposed western 
position of the tsarist capitEil, St. Petersburg, caused Russian offi- 
cials to strive for control of Finland. Later, Soviet strategists were 
likewise convinced that Leningrad's security required Finlaind's sub- 
jugation and therefore mounted invasions. In the postwar period, 
Finland's military importance increased, for developments in 
weapons technology and Soviet basing policies caused the country 
to figure not only in the strategic concerns of its giant eastern neigh- 
bor, but also in those of the North Atlantic Treaty Organization 
(NATO). 

The region itself was peaceful. Sweden, Finland's neighbor to 
the west, was nonaligned and had a long tradition of friendly for- 
eign relations. The militarily vital regions of Central Europe to 
the south were relatively distant, and they were sep2irated from Fin- 
land by the Baltic Sea. In the high north, where Finland and Nor- 
way had a common border, Norway had prohibited operations by 
other NATO forces in peacetime, and it did not permit nuclear 
weapons or Allied bases on its territory. Denmark, likewise part 
of NATO, attached these same restrictions to its membership in 
the alliance. 



298 



Finnish-made 130mm "turret cannon'' firing in reinforced coastal 

artillery emplacement 
Courtesy General Headquarters, Finnish Defense Forces 

Finland's military importance grew from the fact that, although 
it formed — along with Sweden — a vast zone of neutrality between 
the forces of the Warsaw Pact and NATO, the country was adja- 
cent to areas of cruci2d importance to the superpowers. The Soviet 
Union maintained its traditional watchfulness over the Baltic Sea 
and the Gulf of Finland, which controlled access to the Leningrad 
region with its large population and high concentration of vital 
industry. Although the Soviet Union exercised military domina- 
tion over the southern shores of these waters, it was highly sensi- 
tive to the position of Finland, which occupied the northern shore 
and strategically significant island groups. 

Contiguous to Finland's northern border is the Kola Peninsula, 
where some of the Soviet Union's most important military instal- 
lations were located. The only part of the Soviet coastline provid- 
ing ice-free access to the Atiantic year round, the peninsula's harbors 
served as home ports of the Soviet northern fleet and of most of 
its nuclear ballistic missile submarines patrolling the North Atlan- 
tic. In the event of hostilities, the Soviets would regard securing 
the northern Norwegian coast as essential to ensure that their sur- 
face and submarine fleets could reach the North Atlantic, where 
they could disrupt major supply routes for United States forces in 
Europe. Because of the importance of the Soviet military complexes 



299 



Finland: A Country Study 

on the Kola Peninsula, NATO almost certainly would have to view 
them as prime wartime targets. Also crucial to the alliance would 
be confining, in the Barents Sea, whatever Soviet naval assets sur- 
vived attack. Thus, in the event of hostilities, the superpowers would 
commit considerable military resources to this region. 

The official Finnish view held that the country was unlikely to 
be the victim of an isolated attack upon its territory, but rather 
that any military action directed against Finland would almost cer- 
tainly have to be part of a wider conflict between East and West. 
Finnish military planners did not regard their country as having 
strategic targets justifying military aggression, but they believed 
that foreign powers might try to seize Finnish territory to use it 
as a transit route to reach essential targets. 

Thus, Finnish Lapland was regarded as a possible invasion route 
for either NATO forces aiming at the Murmansk area or Soviet 
forces seeking to occupy northern Norway. For the Allies, however, 
the difficulties of mounting a land attack across northern Scandina- 
via against Soviet military bases would be enormous. For this rea- 
son, military analysts judged that NATO operations in the area 
would more likely be air-based and sea-based. 

Finnish strategists had traditionally regarded the wide buffer zone 
formed by Finnish and Swedish air space as a deterrent to attack, 
because it increased the flight time of attacking aircraft to poten- 
tial targets and thereby reduced the operational time in the target 
area. Since the deployment of cruise missiles in the 1980s, however, 
there has been a threat to the inviolability of Finnish air space that 
did not require intrusions on its land and sea territories. Soviet 
sensitivity over the cruise missile threat underscored the significance 
of this problem. 

Military planners considered southern Finland and the Aland 
Islands to be lesser strategic areas, except in the event of a Soviet 
move against southern Norway through Sweden, and they saw a 
NATO thrust against Leningrad through the Baltic Sea as implau- 
sible. Such an operation would necessitate control of the Danish 
Straits and of the constricted Baltic itself against strong Soviet land, 
naval, and air forces. Finland was, however, obliged by treaty to 
secure the Aland Islands in the event of war to prevent their mili- 
tary use by other powers. This obligation underscored another 
aspect of Finland's defense environment. War between the power 
blocs could well mecin a preemptive attack on Finland to secure 
it and to prevent use of its territory by the enemy. 

Although Finnish strategists did not publicly emphasize the mili- 
tary threat represented by the Soviet Union, it was evident that 
the strong Soviet military presence near their shared border, 1 ,200 



300 



National Security 



kilometers in length, was a prime source of concern. According 
to a study by the United States Department of Defense in 1988, 
Soviet conventional forces assigned to the Northwestern Theater 
of Military Operations, an area that included Finland, consisted 
of 12 divisions, 1,350 tanks, and 160 tactical aircraft. Although 
not at full strength, these ground forces could be mobilized quick- 
ly for a drive into southern Finlamd as a preemptive move to deepen 
Soviet defenses of Leningrad and adjacent areas in a crisis situation. 

Another contingency that Finnish planners needed to anticipate 
was the crossing of northern Finland by Soviet land forces as part 
of an attack aimed at securing the coast of northern Norway and 
thereby controlling the sea approaches to the Kola military com- 
plex. In the Pentagon's judgment, Soviet operations were likely 
to include a thrust against northern Norway in which ground forces, 
supported by land-based air and naval amphibious forces, would 
try to seize critical airfields and to destroy early warning instfdla- 
tions. The ground forces badance significantiy favored the Soviets 
in this area, and probably the air force balsmce did as well. Such 
an operation would, nevertheless, be extremely arduous in view 
of the paucity of east-west road links and the austere climate and 
terrain. 

If Finland is unlucky in its strategic location, as a theater of war, 
its physical chciracteristics present exceptional conditions that heavily 
favor a defending army. Only a few regions are conducive to the 
maneuvering of modern ground forces. These are primarily in the 
coastal areas of southern, southwestern, and western Finland, where 
the main administrative and industrial centers, a majority of the 
population, and the most highly developed transport networks are 
located. The vast regions of central and eastern Finland are areas 
of rivers, lakes, and forests. With swamps covering as much as 50 
percent to 60 percent of some parts of this territory, military oper- 
ations would be constricted to the few roads (see Geography, ch. 
2; Transportation and Communications, ch. 3). Even specially 
designed rough-terrain vehicles would be greatly hampered in these 
areas. 

In Lapland, above the Arctic Circle, climatic conditions are 
especially severe. Beginning in November, the long Arctic night 
hampers winter activity. Frost, snow, and cold (-30°C to -35°C) 
can paralyze the operations of large bodies of troops and their air 
support, unless they are specially trained and equipped. In moun- 
tainous parts of Lapland, ground operations would also be forced 
in the direction of the few routes through passes, and the more open 
northern regions provide little cover for ground forces. 

An attack on Finland by sea would be severely hampered by the 



301 



Finland: A Country Study 



jagged coastline of shallow bays, rocks, and clusters of islands. The 
few narrow ship passages would be heavily defended by modern 
coast artillery emplaced on cliffs, by highly maneuverable missile 
boats, and by extensive minefields. The thick ice cover would vir- 
tually preclude the winter operation of warships near Finnish ter- 
ritorial waters. 

Concepts of National Security 

An essential ingredient in Finnish strategic planning was to 
establish the perception that the nation had the will and the capa- 
bility to defend its territorial integrity if conflict broke out. To avoid 
giving the Soviet Union a pretext for intervention, Finland con- 
sidered it vital to demonstrate to Moscow that it could fully meet 
its obligations under the FCMA treaty. Similarly, Finland needed 
to convince Norway, together with its NATO partners and Sweden, 
that Finnish territory would not be used as a base for threatening 
them militarily. The primary task, therefore, was to maintain a 
credible force for repelling a limited conventionEil attack upon the 
country during the course of a wider conflict. 

Finland's traditional policy was to defend the entire country. It 
believed that its level of military preparedness rendered unlikely 
the success of an airborne surprise attack against administrative 
centers and other key areas. It planned to take advantage of its 
relatively large underpopulated expanses and of the special terrain 
conditions to pursue a strategy of defense in depth in order to frus- 
trate an invader. Total defeat of an enemy was not expected. The 
Finns hoped to demonstrate that any effort to secure their territory 
as a base for military operations elsewhere would not be profitable 
compared to the time and sacrifices involved. Despite Finland's 
small population, military planners assumed an enemy would have 
most of its forces employed elsewhere and would be able to use 
only some of its military assets against Finland; hence, the coun- 
try's limited aims could be achieved. The primary burden for 
thwarting an attack directed through Finnish territory would fall 
upon the army. 

The heightened strategic significance of the far northern regions 
of Europe since the 1960s has accentuated the importance of 
Lapland's defenses. In the late 1980s, first-line Finnish troops were 
being specially equipped to take advantage of the harsh conditions 
of terrain, climate, and winter darkness encountered there. Peace- 
time force deployment in Lapland had been reinforced during 
the 1980s with the goal of stationing half of Finland's intercep- 
tor aircraft and nearly one-third of its ground forces there. This 



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National Security 



deployment was considered compatible with the force strengths in 
northern Sweden and in northern Norway. 

Reacting to hints by the Soviets that the threat of cruise missiles 
fired from United States submarines or from West European bases 
justified joint defensive measures, Finnish leaders have strongly 
underscored their determination to act on their own to resist in- 
trusion of Finnish air space in any form. Although advanced ra- 
dar, fire control, and surface-to-air missile systems were being 
acquired, the Soviet embassy in Helsinki asserted in mid- 1988 that 
Finland and Sweden must do still more to improve their air 
defenses. 

Finland's mobilization system was characterized by a flexibility 
that enabled the degree of preparedness to be stepped up as re- 
quired to meet a particular crisis situation or threat. The first forces 
called up for mobilization would be the Fast Deployment Forces, 
consisting of the most mobile and powerful army elements, together 
with almost all navy, air force. Frontier Guard (Rajavartiolaitos — 
RVL) units, and assorted local forces. The Fast Deployment Forces 
would be able to reach peak strength — about 250,000 men, 130,000 
of whom would be ground forces — in two to three days. The Fast 
Deployment Forces (also called Protective Forces) would have as 
their chief duty a protecting or covering mission that would allow 
the total mobilization in seven days of 700,000 men, including 
500,000 ground forces. 

Finnish military doctrine divided forces into gener2il forces, lo- 
cal forces, and support forces once full mobilization was achieved. 
General forces were the best and most powerfully equipped units 
of all the services, and the elements most suited for decisive massed 
attacks. In the late 1980s, these forces were estimated at about 
250,000 men. In addition to the professional cadre, local forces con- 
sisted of older reservists. It was projected that they, being less heavily 
armed, would be used in guerrilla operations, often behind the lines 
in areas overrun by the enemy. When needed, local forces could 
combine with general forces for intense batdes against a weakened 
and encircled enemy. Support forces assisted the other forces with 
logistics, supplies, and other requirements. 

During peacetime, standing ground, sea, and air forces, in keep- 
ing with Finland's neutral posture, were not concentrated against 
any single potential threat but were deployed to deal with inva- 
sion from any direction. Defense was predicated on rapid mobili- 
zation of the country's general forces and on their rapid deployment 
to active fronts. Rather than a static defense, for which resources 
were insufficient, a strategy of maneuver was contemplated. A 
powerful frontal attack would be met by a "deep zone" defense. 



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Finland: A Country Study 

taking fullest advantage of geographical features and climatic con- 
ditions. Tactics of delay and attrition would be employed to pre- 
vent an aggressor from reaching vital areas. As the attacker's lines 
of communication lengthened, concentrated counterattacks would 
be launched under conditions favoring the more lighdy armed Fin- 
nish units. In areas seized by the invader, loccd forces would con- 
tinue to conduct guerrilla-type operations, such as ambushes, 
limited raids on the enemy's supply lines, mining of roads, and 
strikes against logistics centers. In the 1980s, military planners 
modified this flexible defense somewhat, concluding that certain 
areas were so vital to the country's survival that they were to be 
held at all costs. Defense of southern Finland and Helsinki, the 
Aland Islands, and Lapland was to be so intense that they would 
never be ceded in their entirety to enemy control. 

The local defense forces and the RVL would be expected to oper- 
ate as self-contained units carrying out peripheral attacks in rela- 
tive isolation. The object would be to sap the strength of the 
aggressor as he moved deeper into the country, denying the use 
of roads, and, after combat units were cut off from supplies and 
reinforcements, segmenting the fighting. Local and general forces 
could then be brought to bear in devastating strikes against the 
invader. After suffering costly damage over a protracted period, 
the aggressor country would find it expedient to abandon its origi- 
nal objectives and to accept a negotiated settlement. 

Finland recognized that the outbreak of general war in Europe 
might result in the use of nuclear weapons. A considerable effort 
was therefore undertaken to prepare the civilian population against 
the eventuality of nuclear warfare (see Civil Defense, this ch.). Fin- 
land's limited resources did not permit full preparation against 
nuclear Wcirfare, however, and defense planners based their efforts 
on the assumption that any threat to the country would be of a 
conventional nature. Political measures were 2dso undertaken to 
minimize the likelihood of exposure to nuclear attack. Finland's 
active promotion of comprehensive disarmament measures and of 
a Nordic Nuclear- Weapons-Free Zone (NWFZ) was premised on 
the belief that, if the Nordic countries had no nuclear weapons on 
their territories, the superpowers might refrain from including 
nuclear arms in their strategic plans affecting those terrotories (see 
Neutrality, ch. 4). The objection to such a commitment, in the 
view of Western defense planners, was that it would deny NATO 
the nuclear option in defense of Norway and Denmark while plac- 
ing no restrictions on Soviet nuclear forces in the Kola Peninsula 
or on naval vessels in the Baltic Sea. 



304 



National Security 



The Armed Forces 

Authority over national defense rested with the president as the 
supreme commander of the Defense Forces. The president exer- 
cised the highest decision-m2iking responsibility, including the power 
to declare war 2ind to make peace with the consent of the Eduskunta 
(parliament), to order mobilization, and to issue orders directly 
to the commander in chief of the Defense Forces. A decree issued 
in 1957 established a Defense Council with a dual function as the 
supreme planning and coordinating organ and as the president's 
consultative arm in matters affecting the defense of the country. 
The prime minister acted as chairman of the Defense Council if 
the president were not present. Its other members were the ministers 
of defense, foreign affairs, finance, interior, and trade and indus- 
try; the commander in chief of the Defense Forces; and the chief 
of the General Staff. Other ministers could be called upon to serve 
temporarily (see fig. 20). The Defense Council reviewed basic 
defense plans for wartime, deliberated on the financing of nation- 
al defense, and directed preparations for national security in areas 
other than military readiness. 

Parliaimentary oversight W2is exercised through ad hoc parliamen- 
tary defense committees, which had been convened in 1971 , in 1976, 
and in 1981 to assess basic issues of strategy, equipment, and mis- 
sions. Recommendations of the committees had an important bear- 
ing on defense policy and on future budget allocations. Unlike the 
Defense Council, all parties represented in parliament were invit- 
ed to participate. A parliamentary defense commission, acting 
within narrower terms of reference than parliamentary defense com- 
mittees, was convened in 1986. In 1988 the government considered 
setting up a permanent parliamentary council on defense, but no 
action had been taken by the year's end. The parliamentary com- 
mittees had been useful in helping to develop a national consensus 
on security policies and on the commitment of resources to defense. 
The representatives sitting on the committees tended to be among 
those most sympathetic to the needs of the military. Government 
leaders felt, however, that the committees often plunged too far 
into sensitive strategic matters and threat scenarios. Their budge- 
tary recommendations zdso tended to be generous, leaving the mili- 
tary disgruntled when the proposed resources could not be found. 
(One notable exception occurred in 1981, when the procurement 
recommendations of the Third Parliamentary Defense Commit- 
tee were Icirgely realized, in part because of the special circumstances 
of a trade imbalance that made possible large arms purchases from 
the Soviet Union.) 



305 



Finland: A Country Study 




306 



National Security 



The Ministry of Defense supervised the preparation of legisla- 
tion affecting national defense, the submission of the annual defense 
budget, the drafting of defense policies in accordance with princi- 
ples defined by the national leadership, and the implementation 
of policies approved by the government and the parliament. The 
minister of defense had mainly administrative responsibilities, with 
limited influence over major military policy issues. His deputy, 
customarily a military officer of three-star rank, exercised an 
important role within the ministry. 

Command Structure 

The commander in chief of the Defense Forces was directiy subor- 
dinate to the president in matters of military command, principally 
questions of operations and training. He was responsible for issu- 
ing military orders for the preparation and maintenance of readi- 
ness of the Defense Forces, for ensuring proper command relation- 
ships, and for coordinating all branches of the armed forces in per- 
sonnel matters. He made recommendations to the president on the 
organization of military commands and on appointments. 

The peacetime defense organization was structured around 
decentralized and autonomous military areas and districts. There 
were seven military areas and twenty-three military districts as of 
early 1989, although the government was considering reducing the 
number of military areas to five and reducing the districts to between 
fifteen and seventeen. Each military area comprised two to five 
military districts. The military area commander, a major general 
or lieutenant general in peacetime, exercised independent control 
of all military affairs within his region, including the maintenance 
of readiness, training of conscripts and reservists, maintenance of 
a functional mobilization system, wartime logistics preparations, 
cooperation with civilian authorities, and area defense planning. 
The commander in chief, who retained planning control of the navy 
and the air force, could order the commanders of these two ser- 
vices to support a given area command, or he could call upon the 
general forces of one military area to supply reinforcements to 
another military area. 

The authority of the military district commander was limited 
in peacetime to planning for crisis or wartime contingencies, oper- 
ating the conscript and reserve organizations (including call-ups 
and classification for military service), conducting refresher train- 
ing, and maintaining the mobilization system. Under wartime con- 
ditions, the district commander would mobilize reserve brigades 
and battalions into the general forces in his district and would 



307 



Finland: A Country Study 



command local force operations unless command was assumed by 
a general forces headquarters. 

Army 

Finland's defense doctrine foresaw that the army (Maavoimat) 
would bear the brunt of repelling an invasion or any violation of 
Finnish territorial integrity during a period of hostilities. Conse- 
quently, maintenance of sufficient peacetime readiness of ground 
forces enjoyed high priority. The importance assigned to territorial 
defense was reflected in the command structure, which integrated 
army headquarters with general headquarters. Navy and air force 
headquarters were on a lower level, parallel with the seven mili- 
tary area commands. 

As of 1988, the active-duty ground forces consisted of 30,000 
troops, of which 22,300 were conscripts. They were organized into 
8 brigades, each with a reduced peacetime strength of 1,500 to 
2,000, together with 7 independent infantry battalions with strengths 
of up to 500 each, supported by artillery, antiaircraft, engineer, 
special forces, signals, and transport units of varying sizes. Under 
peacetime conditions, the brigade was the basic ground forces unit; 
there were no divisions or corps. In wartime, 2 or more brigades 
plus a number of detached battalions could be combined to form 
a corps of 15,000 to 30,000 tailored to a particular operation. 

Upon mobilization, the first-line army forces, numbering about 
130,000 and including younger reservists with recent training, 
would be deployed initially. In accordance with a fifteen-year 
(1981-96) modernization program, the best equipped of these units 
were known as Brigade 90 forces. The program provides for an 
eventual ten to fifteen brigades. The remaining first-line units, 
known as Brigade 80 forces, were believed to number ten to fifteen 
brigades when mobilized. They were similarly organized, but they 
had less advanced equipment. Although details were lacking, 
analysts believed that no more than one or two brigades met Brigade 
90 standards as of late 1988. 

In the north, the Brigade 90 forces would be jaeger (ranger) 
brigades equipped with tracked all-terrain vehicles, such as the 
Finnish-built NA-140. In central Finland, the jaeger brigades would 
have many Finnish A- 1 80 Pasi wheeled armored personnel carri- 
ers and other light armored vehicles. Armored Brigade 90s in the 
south would have the T-72 main battle tank, while Brigade 80 ele- 
ments would have modernized T-55 tanks; both are Soviet built 
(see table 22, Appendix A). 

A jaeger Brigade 90 consisted of four battalions, each with a com- 
plement of about 1,000 troops and each possessing some artillery 



308 



National Security 



and antitank capabilities. A battalion comprised four rifle compa- 
nies. In addition to small arms, its principal weapons were 81mm 
and 120mm mortars, recoilless antitank rifles, and shoulder-fired 
antitank missiles. The Brigade 90 antitank company was equipped 
with truck-mounted, wire- guided missiles. A brigade also included 
two artillery battalions, one equipped with twelve 122mm howit- 
zers and the other with twelve 155mm howitzers, all towed by 
tracked vehicles. The brigade air defense battalion consisted of 
Soviet SA-14 shoulder-fired missiles and 23mm antiaircraft guns, 
supported by low-level radar and by armored fire control systems. 
The brigade was supported by an engineering battalion with a 
strong minelaying unit, and headquarters, signals, and support 
companies. 

Two coast artillery regiments and three independent battal- 
ions occupied ten principal hardened gun positions, known as 
"fortresses," protecting key shipping lanes of the southern coast. 
These fixed positions, with batteries of turret-mounted 100mm and 
130mm guns, had been blasted out of granite clifl"s. They were sup- 
ported by mobile coast artillery battalions to which, in 1988, were 
being added mobile Swedish RBS-15 antiship missUes mounted 
on all-terrain trucks. 

Antiaircraft defenses were the responsibility of the army, close- 
ly coordinated with the air force. The principal weapon was the 
Soviet SA-3 Goa truck-mounted surface-to-air missile. In 1988 
negotiations were reportedly underway with France for the pur- 
chase of Crotale missile launchers and fire control systems to be 
mounted on the A- 180 Pasi armored vehicle for medium-range 
point defense. 

In peacetime, trained garrison forces that could be formed into 
operational units within hours totaled about 10,500 (8,000 army 
and 2,500 RVL). In an emergency, the existing brigades and 
independent battalions could be brought up to a wartime strength 
of some 70,000 within 12 to 24 hours. In the event of an acute 
crisis or an attack on the country, planners anticipated that the 
Fast Deployment Forces — consisting of the most mobile and power- 
ful army elements, together with almost all navy, air force, and 
RVL units, and key local force units in border areas — would be 
mobilized. The army complement of the Fast Deployment Forces 
amounted to about 130,000 and could be activated in two to three 
days. 

Details on the organizational pattern of the fuUy mobilized army 
were not made public. Tomas Ries, a specialist in Nordic security, 
has estimated that the army's share of the general forces, that is, 
the most powerful elements of the Defense Forces, numbered 



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Finland: A Country Study 



perhaps 200,000. In combat these troops would be organized into 
20 to 25 brigades; about 70 independent light infantry, artillery, 
antitank, and other specialized battsdions averaging 800 person- 
nel each; and some additional specialized forces, mostly of com- 
pany strength. Many of these units would be equipped with older, 
less sophisticated weapons, and would include higher age-groups 
that had not undergone recent training. 

The army's share of local forces would consist of about 250 light 
infantry battalions, as well as smaller specialized units, number- 
ing up to 250,000. They would serve the functions of local defense, 
surveillance, and guard duty. An important function of the local 
forces would be to lay antivehicular mines to block the limited road 
network. These forces would be armed with modern basic infan- 
try weapons, supplemented by older light antitank weapons, mor- 
tars, and vehicles, including some commandeered from the civilian 
sector. 

Support troops formed a separate category, normally operating 
in rear areas, and would not be expected to take part in combat. 
They would carry out service, support, and logistical tasks. Their 
mobilized strength would be about 100,000. 

Navy 

The main peacetime mission of the navy (Merivoimat), together 
with the coast guard, was to conduct surveillance of territorial waters 
and fishing zones and to identify violators. During a crisis situa- 
tion or hostilities, the navy would be called upon to prevent 
unauthorized use of Finland's territorial waters, to protect vital 
sea routes and maritime traffic, and to close off its most important 
ports. Treaty obligations and strategic concerns made securing the 
demilitarized Aland Islands a key wartime mission of the navy. 
This it would do with the help of the army, coast artillery, and 
the coast guard. If faced by an amphibious attack, the navy's 
objective would be to wear down the aggressor and to restrict his 
operations. 

Naval tasks would be carried out in an integrated manner with 
the army coast artillery and the air force. The shallow waters of 
the coastline, broken by an extensive archipelago, would facilitate 
the laying of defensive mines, which would figure importantly in 
defense against seaborne invasion. Although the fleet units were 
limited in size and in weaponry, their maineuverability and missile- 
based firepower could inflict damage on a hostile force operating 
in Finnish waters and in adjacent sea areas. The precise form in 
which a naval threat might develop was unclear, because a Soviet 
invasion by sea was unlikely and Western ships would be directly 



310 



Soviet-built SA-3 GO A low- to medium-altitude antiaircraft missiles 

in use by Finnish Defense Forces 
Courtesy General Headquarters, Finnish Defrnse Forces 

exposed to Soviet naval strength in the Baltic, in the event of general 
conflict. By providing for control over its own coastal waters, 
however, Finland hoped to convince the Soviets that the Gulf of 
Finland would be secure and that the approaches to Leningrad 
would not be left unguarded. 

Under the 1947 Treaty of Paris, naval manpower strength was 
limited to 4,500. In addition to the overall limit of 10,000 tons, 
the navy was not permitted to operate submarines or torpedo boats. 
As of 1988, active navsd personnel numbered only 2,700, of whom 
1 ,300 were conscripts. The largest vessels were two smzJl corvettes 
of 660 tons, each armed with 120mm guns and antisubmarine rocket 
launchers. Eight missile boats were armed with Swedish and Soviet 
ship- to- ship missile systems. Four more missile boats were due to 
be delivered in the early 1990s. These boats were supported by 
inshore patrol craft, together with minelaying and minesweeping 
vessels (see table 23, Appendix A). 

In peacetime the main naval units were organized into gunboat, 
missile boat, and mine warfare flotillas. Under wartime conditions, 
they would be organized into task forces with a mix of vessels as 
required for specific operations. The wartime task forces would be 
directed by the navy commander in chief and would be part of the 
general forces. Naval assets operating with the coast artillery would 



311 



Finland: A Country Study 



be directed by the commander of the military area in which they 
were located and would form part of the local forces. All three flotil- 
las were based at the navy's operational headquarters at Pansio, 
near Turku in the southwest, where an archipelago with few naviga- 
ble channels, guarded by coastal fortifications, would present great 
obstacles to an intruding naval force. The gunboat flotilla consisted 
of one corvette as a command ship and the ten Tuima class missile 
boats and Nuoli class fast attack craft. The missile squadron con- 
sisted of the other corvette and the four Helsinki class missile boats. 
The mine warfare squadron was made up of the minelayers and 
minesweepers. A patrol flotilla, based at Helsinki, operated the 
Ruissalo and Rihtniemi class attack craft. 

Owing to a serious manpower shortage, only about half of the 
fleet was manned and operational under peacetime conditions. The 
readiness of the remaining ships was reportedly maintained at an 
adequate level by keeping them heated, by frequently testing their 
systems, and by rotating them into active service. 

During a period of crisis or conflict, the Coast Guard, which 
was part of the RVL, would be integrated into the navy. Several 
of its larger patrol craft of the Tursas and Kiisla class were fitted 
with antisubmarine warfare weapons. A large number of patrol 
boats were equipped with submarine tracking gear. 

Air Force 

The peacetime missions of the air force (Ilmavoimat) were the 
patrolling of Finnish air space and the surveillance, identification, 
and interception of intruding aircraft. In an average year, ten to 
twenty violations of Finnish air space were detected. If conflict de- 
veloped in the region, the air force would have the tasks of preserv- 
ing territorial integrity, preventing overflight of hostile planes and 
missiles, preventing Finnish territory from being used as a base 
for attack, and supporting army and navy operations. The pro- 
tection of Finnish air space in the event of East-West hostilities was 
considered a highly salient aspect of the air force role. The possi- 
bility that Finnish air space would be violated on the flight paths 
of bombers and cruise missiles of NATO and Warsaw Pact forces 
was an issue of intense concern. As of 1988, Finland was in the 
process of acquiring ftirther capability to detect, to intercept, and 
to destroy cruise missiles crossing Finnish territory. 

To fulfill these missions, Finland had given priority in the late 
1970s to the upgrading of its interceptor and reconnaissance capa- 
bilities. Its three combat air squadrons were equipped with Soviet 
MiG-21bis and Swedish Saab J-35 Draken fighters. The forty-seven 
Hawk Mk-51s purchased from Britain for advanced training 



312 



National Security 



and reconnaissance were not counted as combat aircraft under the 
limits prescribed by the 1947 peace treaty, but they could be fitted 
with racks for bombs, rockets, and missiles for use as hght attack 
aircraft. Air force transport capability was limited, consisting 
primarily of three Dutch F-27 Fokkers and six Soviet Mi-8 heUcop- 
ters (see table 24, Appendix A). 

Air force headquarters was located at Tikkakoski in central Fin- 
land. The country was divided into three air defense regions (see 
fig. 21). Each air defense region was the operational zone of an 
air wing, functioning in coordination with the corresponding mili- 
tary areas. Each of the three command centers was individually 
responsible for its regional air defense, based on directives issued 
by the air staff. One fighter squadron was assigned to each wing, 
but the necessary basing and support infrastructure was in place 
to enable the air force commander to concentrate all air force 
resources in a single region if necessary. 

As of 1988, the Lapland wing, consisting of eighteen Drakens, 
was based at the joint civilian-military airfield near Rovaniemi; 
the wing's headquarters were in a nearby hardened shelter com- 
plex. The Satakunta wing, with twelve Drsikens based at Tampere- 
Pirkkala, was responsible for southwestern Finlcind. All of the wing's 
command facilities, workshops, and aircraft shelters were hardened, 
having been blasted out of granite cliffs. Defense of southeastern 
Finland came under the Karelian wing, which had a squadron of 
thirty MiG-21bis plus several Hawks for training and patrol duties, 
operating from Kuopio-Rissala. All three wings had facilities in 
place permitting the use of alternative military and civilian airfields, 
as well as prepared highway strips. 

In addition to the three combat squadrons based at wing head- 
quarters, the transport squadron was based at Kouvola-Utti and 
the training squadron was based at Luonetjarvi, adjacent to the 
flying school at Kauhava. Primary air surveillance was carried out 
by a fixed long-range radar system supplemented by mobile low- 
altitude radar, fixed in peacetime, but transportable to concealed, 
hardened sites in wartime. The civilian air control network was 
also closely linked to the military system. Automatic long-range 
radar, ordered in 1988 from the French firm of Thomson-CSF, 
will be installed at six or seven sites, including one in the far north 
at Kaamanen that will extend surveillance over the Arctic Ocean 
and the Kola Peninsula. 

Flight training was conducted at the Air Force Academy at Kau- 
hava. The Valmet L-70 Vinka was used for primary training (forty- 
five hours of flight time). Students then made the transition to jet 
training on the Hawk (100 hours of flight time), preceded by 



313 



Finland: A Country Study 




Figure 21. Air and Coastal Defenses, 1988 



314 



National Security 



considerable practice on flight simulators. An intermediate train- 
er was not considered necessary. Conversion to the Draken or the 
MiG-21 and advanced tactical training were carried out after as- 
signment to the fighter squadrons. A fully qualified interceptor pilot 
underwent a total of seven years of preparation. More pilots were 
being trained than Finland needed for its existing combat aircraft. 
Moreover, basing and logistical facilities were sufficient for about 
three times as many combat aircraft as were in the peacetime 
inventory. 

Conscription and Reserve Duty 

All Finnish males were liable for military service between the 
ages of seventeen and sixty. The call-up for active duty normally 
occurred at the age of twenty, although students could postpone 
service until completion of their education. Over 90 percent of 
young men reaching military age actually entered the Defense 
Forces, a rate believed to be the highest of all Western countries. 
There had traditionally been three conscript contingents during 
the course of a year, in February, in June, and in October, but 
in 1989 these were to be reduced to five call-ups every two years, 
owing to the decline in the numbers coming of age. For the same 
reason, the normal age for entering the service was to be reduced 
to nineteen. About 38,000 conscripts were trained annually, al- 
though the decreased birth rate would result in as few as about 
26,300 inductees by 1993, stabilizing at that level. As a consequence, 
the number of reservists of all categories, which had been main- 
tained at about 700,000, would taper off to about 600,000 during 
the 1990s. 

Prior to 1987, conscientious objectors had been permitted to serve 
in the military in a noncombatant capacity for eleven months, or 
in civilian social service for twelve months. Legislation enacted in 
that year, however, required a conscientious objector to serve in 
alternative civilian service for sixteen months, twice the length of 
minimum military service. A number of objectors, regarding the 
new law as a form of punishment, did not accept these conditions, 
and they were sentenced to prison terms. 

Women were not accepted in the Defense Forces, although the 
tightened manpower situation had provoked discussion of mea- 
sures to incorporate women into training programs on a volun- 
tary basis to handle nonmilitary tasks in an emergency. About 7,000 
women were employed by the Defense Forces, mainly in clerical 
positions and as nurses. A considerable number were used by the 
air force as radar monitors in remote areas. Women employees 
wore uniforms, but they did not receive military training or carry 



315 



Finland: A Country Study 



weapons and had little opportunity for career adv2incement. 

Conscripts were assigned upon induction to a particular branch 
or corps of service, depending upon existing personnel require- 
ments, although personal preferences were respected to the extent 
possible. The National Conscription Act of 1950 set the duration 
of Service for ordinary conscripts at 240 days (8 months) and for 
reserve officers and NCOs at 330 days (11 months). Certain 
specialists and naval conscripts also served for 330 days. About 48 
percent of the total intake of conscripts served for the longer period. 
In 1988 the military announced that a separate category of weapons 
specialists would be designated to serve for nine and one-half 
months. 

Service in the reserves was obligatory after the completion of 
active duty. For officers and NCOs, active reserve duty continued 
until age sixty; and for others, until age fifty. Those who completed 
their active reserve obligation at age fifty were listed in class one 
of the auxiliary reserve until age sixty when all reserve obligations 
ended. Those exempted from active duty on grounds of disability 
were assigned to class two of the auxiliary reserve, and those aged 
seventeen to twenty without military training were listed in class 
three. 

Until the late 1970s, annual training of reservists was neglected 
because of budgetary pressures. Efforts were underway in the 1980s 
to improve the situation in order to compensate for the declining 
intake of conscripts and to ensure that reservists acquired some 
familiarity with the new and more complex equipment being 
introduced. The number of reservists undergoing annual training 
increased from 30,000 in 1979 to nearly 50,000 in 1988. The rela- 
tively infrequent and brief periods of reserve training were still con- 
sidered insufficient by some observers, however. They noted that 
Switzerland, adthough it required a shorter period of initial ser- 
vice, trained far more reservists each year by longer and more fre- 
quent refresher call-ups. 

Troops assigned to the Fast Deployment Forces could expect to 
be called for refresher training at least every fifth year; those in 
some specicdist categories were called up more often. Other reserv- 
ists, generally those in higher age brackets, were not scheduled for 
training unless their assigned categories were changed. Call-ups 
were on a battalion basis, and reservists exercised their wartime 
tasks for a period of seven to ten days. The cumulative total peri- 
od of active duty for reserve officers could not exceed 100 days; 
for reserve NCOs, 75 days; and for privates, 40 days. 



316 




Summer and winter military exercises in Lapland 
Courtesy General Headquarters, Finnish Defense Forces 



317 



Finland: A Country Study 

Training and Education 

All men serving in the Finnish Defense Forces, even those aspir- 
ing to become career or reserve officers, underwent basic conscript 
training. Army training was conducted within the unit to which 
the conscript was assigned. The standard initial training phase of 
twelve weeks was followed by twelve to nineteen weeks of individu- 
alized training in infantry, field artillery, coast artillery, antiair- 
craft, signals, or engineering skills. An ordinary army conscript's 
service concluded with a refresher period of several weeks, com- 
posed of advanced unit training and a field exercise that involved 
several units of the same conscript contingent. Training programs 
stressed the development of combat motivation, physical fitness, 
marksmanship, and the ability to maneuver and to survive in in- 
dependent guerrilla operations under difficult conditions. Basic 
training was rigorous, and conscripts spent at least sixty nights out- 
side, even during winter. Evaluations by the conscripts of the ef- 
fectiveness of the training and of the NCO training staff were gener- 
ally favorable. 

Those conscripts who excelled in the initial stages could apply 
for a special fifteen-week period of training as reserve NCOs, after 
which they completed their active military service as squad lead- 
ers. Reserve officer candidates selected during the NCO training 
phase pursued the first eight weeks of NCO training, followed by 
a further fourteen weeks of reserve officer training. This included 
six weeks of basic training as platoon leaders and three weeks of 
practice in the coordinated operation of various weapons units. After 
completion of training, the reserve officer candidates returned to 
their original units for thirteen weeks of service as trainers. At the 
conclusion of their eleven months of service, they were commis- 
sioned as second lieutenants. In the late 1980s, about 25 percent 
of each class of conscripts became NCOs and about 7 percent 
become officers. 

The first two years of a three-year educational progr2im for C2ireer 
officer candidates were conducted at the Military Academy at San- 
tahamina near Helsinki for all three branches of the armed forces 
and for the RVL. Army cadets attended a school in their chosen 
arms specialty during the third year. Naval cadets spent the third 
year of training at the Naval Academy at Helsinki. Air cadets at- 
tended the Air Force Academy at Kauhava for the third year of 
training. The Defense Forces announced in 1988 that the acade- 
my's curriculum would be revised to include nonmilitary subjects 
so that its graduates would have the equivalent of a university-level 



318 



National Security 



degree. The duration of the course would probably be lengthened 
to three and one-half years. Entry was by examination among those 
who had completed the reserve officer program during their con- 
script service. 

Army graduates of the Military Academy were commissioned 
as first lieutenants (with promotion to senior lieutenant within a 
year), served as instructors for three or four years, and then at- 
tended an eight-month to ten-month course that normzJly led to 
the rank of captain within two to three years. Six to eight years 
after taking the captains' course, officers could take examinations 
leading to the two-year (three-year, for technical specialties) general 
staff officers' course at the War College. About thirty-five officers, 
from all three services, who had been successful in the examina- 
tions, were enrolled annually. These officers could expect to have 
general staff assignments, and they would become eligible for pro- 
motion to the ranks of colonel and gener2d. Officers not attending 
the War College were eligible for a senior staff officers' course of 
eight to ten months, completion of which qualified them for the 
ranks of major and lieutenant colonel. A very limited group of 
officers was selected to attend advanced courses abroad, in Sweden, 
France, the United States, and, occasionally, the Soviet Union. 

Training of career NCOs was conducted at the one-year Non- 
commissioned Officers School and at various branch or service 
schools. Applicants had to have completed the reserve NCO course 
during their conscript service, whereupon they were permitted to 
take a qualifying examination for the lowest regular NCO rank 
of staff sergeant and subsequent examinations to advance to ser- 
geant first class and master sergeant. After three years of service, 
an NCO could apply for phase two of the Non-Commissioned 
Officers School as a qualification for promotion to sergeant major. 
Since 1974 career NCOs who successfully advanced through the 
various training stages were eligible for commissions and, 
ultimately, for promotion as high as captain. 

Each service also had its own training institutions. The infantry 
had its combat school and paratroop school. The artillery had the 
artillery school — with its ranges near Rovaniemi in northern Fin- 
land, the coast artillery school, and the aintiaircraft school. In 
addition to pilot training, the air force had specialist schools for 
maintenance, radar, and communications personnel. Refresher 
courses for reservists were conducted either in these permanent 
schools or in the reserve units themselves. 

Uniforms and Insignia 

The Defense Forces wore three basic types of uniforms — a dress 



319 



Finland: A Country Study 



KENRAALI 


GENERAL 




AMIRAALI 

ADMIRAL 


KENRAALI- 
LUUTNANTTI 

1 


LIEUTENANT 
GENERAL 

KENRAALI- 


LUUTNANTTI 


LIEUTENANT 
GENERAL 

VARA- 


AMIRAALI 

VICE ADMIRAL 


KENRAALI- 
MAJURI 

R 


MAJOR GENERAL 
KENRAALI- 


MAJURI 

U 


MAJOR GENERAL 
KONTRA- 


AMIRAALI 


REAR ADMIRAL 


EVERSTI 


COLONEL 


EVERSTI 

B 


COLONEL 


KOMMODORI 

CAPTAIN 


EVERSTI- 
LUUTNANTTI 


LIEUTENANT 
COLONEL 

EVERSTI. 


LUUTNANTTI 

H 


LIEUTENANT 
COLONEL 


KOMENTAJA 

COMMANDER 


MAJURI 


MAJOR 


MAJURI 

m 


MAJOR 
KOMENTAJA- 


KAPTEENI 


LIEUTENANT 
COMMANDER 


KAPTEENI 


CAPTAIN 


KAPTEENI 


CAPTAIN 
KAPTEENI- 


LUUTNANTTI 

LIEUTENANT 


n m/ 
! leaf 

D 


1ST LIEUTENANT 
YLI- 


In 


1ST LIEUTENANT 

YLI- 


LUUTNANTTI LUUTNANTTI 


LIEUTENANT JUNIOR GRADE 


VANRIKKI 


20 LIEUTENANT 




2D LIEUTENANT 
ALI- 


LUUTNANTTI 




FINLAND 
RANK 

ARMY 


U.S. RANK TITLES 
FINLAND 


RANK 
AIR FORCE 


U.S. RANK TITLES 
FINLAND 


RANK 
NAVY 

U.S. RANK TITLES 



320 



National Security 




321 



Finland: A Country Study 

uniform, a service uniform, and a field uniform. The army dress 
and service uniforms were field- gray. The service uniform for army 
officers consisted of a field- gray jacket and trousers, a service cap, 
a silver-gray shirt, a field-gray four-in-hand tie, and black, low- 
quarter shoes. The service uniform became the dress uniform when 
augmented with breeches, riding boots, and a field cap. In winter, 
officer personnel wore field- gray overcoats and fur pile caps. Sum- 
mer wear for enlisted personnel consisted of a shirt and trousers, 
combat boots, a scarf, and a visorless field cap. The field uniform 
was the service uniform supplemented by jackboots, a camouflage 
jacket, and trousers in summer — or white overalls in winter, along 
with a field cap or a steel helmet. 

Air force uniforms were blue; the navy wore dark blue in winter 
and white in summer. Officers of the air force and the navy wore 
service uniforms of the same cut and style as army officers. The 
air force dress shirt was light blue, and the navy dress shirt was 
white. 

Army officers wore shoulderboards designating by color the 
branch of service. Insignia of rank were worn on the lapels. Air 
force officers wore sleeve bars, and naval officers wore stripes that 
conformed closely to the rank insignia of the United States Navy 
(see fig. 22). Enlisted personnel wore chevrons against a background 
color designating the branch of service. Noncommissioned officer 
ranks were also worn on sleeveboards (see fig. 23). 

Conditions of Service 

The incomes of career military personnel were considered ade- 
quate, although not generous, in terms of the high standard of liv- 
ing in Finnish society generally. Officer and NCO salary scales 
combined with their allowances were intended to be equivalent to 
salaries in the civil service, which were regarded as somewhat lower 
than the remuneration for equivalent forms of employment in the 
private sector. As of 1986, the salary of a colonel was about 
Fmkl3,000 monthly and that of a major general was about 
Fmkl5,700 (for value of the Finnish mark — see Glossary). Family 
allowances, allowances for service under hardship conditions (e.g., 
during field exercises in the far north, on offshore islands, and at 
remote coast artillery sites), and special allowances (for certain 
categories of duty, such as those of aircraft pilots and naval per- 
sonnel on sea duty) were also paid. The normal work week was 
forty hours; personnel through the rank of captain received over- 
time pay when on duty for longer periods. There was no extensive 
post exchange or commissary system. Most career military were 



322 



National Security 



privately housed; those assigned to base housing were charged a 
moderate rent. 

Officers attaining at least the rank of major were eligible for full 
retirement twenty-five years after graduating from the Military 
Academy. Promotion through the rank of captain was virtually 
automatic. Those who had attended the Military Academy could 
expect to attain at least the rank of major and probably that of lieu- 
tenant colonel, but subsequent promotional opportunities then nar- 
rowed sharply. As of 1986, there were 672 career majors and lieu- 
tenant commanders, 250 lieutenant colonels and commanders, and 
88 colonels and naval captains. There were only fourteen major 
generals and rear admirals and eight lieutenant genergds and vice 
admirals. 

Some captains chose to retire after twenty years of career ser- 
vice when their partial pensions were (in 1986) between Fmk6,800 
and Fmk7,800 monthly. One personnel problem caused by modest 
pay was the loss of military pilots to commercial airlines. An 
experienced pilot with the rank of captain could expect a total income 
of about Fmk 14,000 monthly as of 1988. By resigning to fly for Fin- 
nair, he could raise his monthly income to about Fmk20,000. 

Conscripts received no pay, but they were paid a modest daily 
expense allowance, a source of some dissatisfaction. It had, however, 
been progressively increased from Fmk6.75 in 1981 to Fmkl7 in 
December 1987. Many conscripts complained that they had been 
forced to fall back on their personal savings during their eight to 
eleven months of active service. Conscripts were, however, entitled 
to educational loans at the conclusion of their service, as well as 
mustering-out bonuses and other benefits, including up to ten paid 
trips home on leave. They were guaranteed reemployment at the 
jobs they had held when they entered active duty. 

Defense Spending 

The combined budget of the Defense Forces and the RVL have 
remained fairly constant during the 1980s as a percentage of total 
government expenditures, in most years ranging from 5.5 to 6 per- 
cent. Defense costs generally constituted about 1.5 percent of gross 
national product (GNP — see Glossary), although they rose to 1.7 
percent in 1983 before diminishing to 1 .48 percent in 1987 as a con- 
sequence of budget cuts imposed on the Ministry of Defense. The 
defense budget totaled Fmk5.58 billion in 1987 and Fmk6.04 bil- 
lion in 1988. 

During the 1982-86 period, the principal expense category 
was equipment replacement and procurement (31 percent of the 
total budget), followed by payroll costs (25 percent). Upkeep of 



323 



Finland: A Country Study 



conscripts and training expenses averaged 1 3 percent of the bud- 
get; operations and maintenance, 16 percent; and real estate and 
other expenses, 15 percent. The procurement projection for the 
5 -year period, 1987-92, earmarked 48 percent for the army, 25 
percent for the air force, 20 percent for the navy, and 7 percent 
for common-use equipment. This reflected increased emphasis on 
the acquisition of armor and firepower for the army and a diminish- 
ing rate of procurement for the air force. The air force share was 
expected to rise again after 1992, however, when the entire fleet 
of fighter aircraft was scheduled for replacement. 

Although Finland's defense budget showed a slight increase dur- 
ing the 1980s, it failed to maintain the targeted annual real growth 
rate of 3.8 percent established by the Third Parliamentary Defense 
Committee in 1981 . In both absolute and relative terms, Finland's 
defense budget continued to be among the lowest in Europe. A 
study prepared by the United States Arms Control and Disarma- 
ment Agency found that Finland's defense effort, expressed in terms 
of military expenditures as a ratio of GNP, was among the lowest 
of the developed countries of the world. Only Japan, Luxembourg, 
and Iceland had lighter defense burdens, based on 1985 data. Fin- 
land also ranked low in military expenditures per capita (US$156 
in 1984, calculated in 1983 dollars) and as a percentage of central 
government expenditures (one hundred twenty-third in the world 
in 1985). 

These low budget oudays presaged future deficiencies in modern 
arms when existing equipment had to be replaced. As senior mili- 
tary leaders pointed out, costs of new weaponry were increasing 
at a rate of 5 to 15 percent annually on world markets, with the 
result that new procurements could not keep pace with equipment 
obsolescence and deterioration, especially in the army. Finnish 
analysts argued, however, that the budgeted figures somewhat 
understated Finland's real defense effort compared with other Scan- 
dinavian countries, because of the low conscript pay and the fact 
that certain military infrastructure costs as well as military pen- 
sions were not included in the defense budget. Moreover, the RVL, 
which would be an important adjunct to the military in an emer- 
gency, was included in the Ministry of Interior budget rather than 
in the defense budget. 

The Armed Forces in National Life 

The Defense Forces held a position of esteem and honor in Fin- 
nish society. This was accounted for in part by their reputation 
for valor, earned in preserving Finland's independence during the 
Winter War, and by the common military service experience of 



324 



National Security 



male citizens. The long reserve obligation of a large part of the 
population also reinforced continuing interest in the effectiveness 
and the welfaire of the military establishment. The obligatory period 
of service was perceived as an important unifying factor for Fin- 
nish society. Conscription was treated as an opportunity to pro- 
vide civic education by deepening understanding of the history and 
the security policies of the country and to improve standards of 
behavior and good citizenship. One of the arguments advanced 
for national service for women was that the experience would help 
them, as citizens, to comprehend national security issues better and 
to view the military in a positive light. 

Opinion surveys revecded a high degree of public confidence in 
the Defense Forces and a willingness to provide the necessary 
resources for an effective defense. Polls generally found that over 
75 percent of Finns agreed that the country should be willing to 
go to war to defend itself. (Among conscripts, 95 percent supported 
a firm defense against aggression.) In 1988 one-half of those que- 
ried were in favor of the existing level of defense appropriations, 
while one- third believed they should be increased, and only slightly 
more than one-eighth thought they should be reduced. The need 
for a sufficient level of military readiness was accepted by all major 
parties represented in the Eduskunta; only communist factions had 
urged curtailing defense expenditures, arguing that any future war 
was bound to be nuclear, making preparations for a conventional 
conflict of little avail. 

The Defense Forces were often prominently involved in public 
events, helping to organize and to stage large sports competitions, 
ceremonies, conferences, and exhibitions. In most communities, 
there were guilds connected with military units, often those linked 
to the area by long tradition, that brought together older and youn- 
ger veterans. The Defense Council was active in furthering the pub- 
lic's knowledge of defense issues, and by the late 1980s about 20,000 
Finns, prominent locally or nationally, had attended courses under 
its direction. About 20 percent of those receiving instruction 
attended a course lasting nearly a month; the remainder attended 
a one- week course. 

The Finnish military establishment had intervened in politics 
during the Civil War of 1917-18 and during the subsequent clashes 
between the right and the left wings in the 1920s. In the period 
preceding World War II, leaders of the armed forces had sought 
to convince the government and the public to initiate military pre- 
paredness for the impending conflict. Since the end of the war, 
however, the constraints of the 1947 peace treaty and the FCMA 
treaty, together with the authority asserted by civilian governments, 



325 



Finland: A Country Study 



have discouraged direct involvement by the military in politics. The 
career military were forbidden to join political parties or to run 
for political office while on active duty. They were, however, per- 
mitted to vote and to hold office at local levels, such as member- 
ship on municipal boards, which did not require party affiliation. 

During the 1980s, the public profile of the senior members of 
the armed forces was generally low; the leadership confined itself 
to restrained comments when it felt this was needed to draw atten- 
tion to the inadequacy of defense appropriations. The impact of 
the military on issues affecting national security was, nonetheless, 
significant. Its opinion was highly respected, in part as a legacy 
of the Winter War and in part as a result of the direct experience 
of the entire male segment of society with matters of national 
defense. Observers believed it probable that a large majority of the 
representatives in the Eduskunta (parliament) held officer commis- 
sions in the reserves. Views of the senior commanders were accorded 
serious attention by top policymakers and legislators. Reserve officer 
associations in every part of the country formed a strong constit- 
uency sympathetic to the interests of the military. 

There appeared to be little sentiment among the public that the 
military enjoyed excessive influence in the Finnish political sys- 
tem. In a survey taken in 1984 concerning the power of various 
institutions, over 75 percent of those polled felt that the armed forces 
exercised the right amount of power; only 15 percent thought that 
they held too much power. In this respect, the public's estimate 
of the military was more positive than its estimate of any of the 
other institutions of government and society, except the presiden- 
cy itself. 

United Nations Peacekeeping Activities 

Finland has taken an active role in United Nations (UN) peace- 
keeping matters as a means of demonstrating its interest in the main- 
tenance of international peace. Because of their unimpeachable 
behavior in conformity with Finland's neutral status, Finnish troops 
have almost invariably been welcomed as elements of UN pea- 
cekeeping forces by the parties involved in international crises. A 
law enacted in 1964, defining the conditions of Finnish participa- 
tion, limited the maximum number of soldiers serving at any one 
time to 2,000. Regular troops of the Defense Forces could not be 
sent abroad, so the peacekeeping forces were composed of volun- 
teer reservists, career officers, and NCOs who wished to be detached 
from their units to serve with UN contingents. A six-month rota- 
tion was customary, but many reservists had volunteered for 
repeated service. By the late 1980s, some 20,000 Finns had served 



326 



National Security 



in UN peacekeeping missions. Specialized instruction was provided 
at a permanent training site where clothing and equipment were 
stored for immediate availability. A stand-by force, consisting of 
a reserve motorized infantry battalion of approximately 700 men, 
could be prepared for mobilization anywhere in the world within 
four weeks. Its key officers could be in place much sooner. Officer 
training for the special requirements of UN service was conducted 
on a cooperative basis with other Nordic countries. Finland was 
responsible for training militar)^ observers; Sweden trained staff 
officers; Denmark, military police officers; and Norway, logistics 
and transportation officers. 

Within a year after its admission to the UN in 1955, Finland 
sent a reinforced rifle company of 250 men as part of the UN Emer- 
gency Force (UNEF) based in Egypt for service in the Sinai and 
the Gaza Strip. In 1964 a reinforced battalion with a strength of 
1 ,000 men was attached to the UN Force in Cyprus (UNFICYP). 
It was composed of five light infantry companies and a support 
company, armed with rifles, machine pistols, light machine guns, 
mortars, and bazookas. Later Finnish contingents were organized 
and equipped in similar fashion, with the addition of a vehicle repair 
unit, a field hospital, and most transport, signal, and housing 
requirements. 

Finnish units served from 1973 to 1979 in a buffer zone between 
Israel and Egypt in the Suez Canal area as part of the UN Emer- 
gency Force II (UNEF II), after which the contingent was trans- 
ferred to the Golan Heights between Israeli and Syrian forces as 
part of the UN Disengagement Observer Force (UNDOF). 
Beginning in 1982, a Finnish battalion was assigned to serve with 
the UN Interim Force (UNIFIL) in southern Lebanon. As of late 
1988, about 1 ,000 members of the Finnish armed forces were serv- 
ing on peacekeeping missions. In addition to the UNIFIL battzil- 
ion, they were assigned as cease-fire observers in Cyprus, along 
the India-Pakistan border, in the Sinai, on the Golan Heights be- 
tween Israel and Syria, in the Persian Gulf, and in Afghanistan. 
Finland was 2dso committed to contribute to the UN peacekeep- 
ing force to be sent to Namibia. 

Sources of Equipment 

By the late 1980s, nearly 40 percent of Finnish military equip- 
ment purchases were of domestic manufacture, the remainder be- 
ing imported about equally from Soviet and Western sources. The 
Soviet Union was the largest single source, followed by Sweden, 
France, Britain, and the United States. Finnish industry was capable 
of supplying many of the Defense Forces' needs for explosives and 



327 



Finland: A Country Study 

ammunition, light weapons, mortars cind artillery, ships, and trans- 
port. Low-level radar and many other electronic items were also 
being produced locally. Finland continued to be dependent on for- 
eign suppliers for jet aircraft and helicopters, missiles, tanks and 
most armored vehicles, and antiaircraft systems. 

Arms Acquisitions from Foreign Suppliers 

Until the late 1950s, strained economic conditions precluded the 
refitting of the Finnish armed forces, which had to be content with 
the large stocks of munitions and equipment remaining at the end 
of World War II. As the economy strengthened, a political deci- 
sion was made to modernize the armed forces so that they could 
defend Finnish neutrality credibly. The government allocated a 
modest amount for new equipment in 1955, and it enacted a major 
new appropriation in 1957. These procurements stimulated a revival 
of the small Finnish armaments industry, although most major items 
continued to be acquired from abroad. Britain was initially the 
primary source of supply, providing tanks, aircraft, and a train- 
ing ship. Jet trainers were purchased from France and Sweden, 
and antiaircraft guns and fire control systems were obtained from 
Switzerland. The decision reached in 1959 to rely more heavily 
on arms procurements from the Soviet Union was partly a politi- 
cal effort to demonstrate Finnish neutrality by balancing purchases 
from the East and from the West. Economic factors also played 
a part. Finland's trade with the Soviet Union was based on bilateral 
balancing, and imports from the Soviet Union had to be found to 
compensate for the high level of Finnish exports. Favorable credit 
terms offered by Moscow were a further attraction (see Foreign 
Economic Relations, ch, 3). 

Among the heavy weapons deliveries from the Soviet Union dur- 
ing the early 1960s were T-54 and T-55 main battle tanks, armored 
personnel carriers, self-propelled antiaircraft guns, and artillery 
pieces. The political crisis sparked by a Soviet call for consulta- 
tions under the FCMA treaty in October 1961 convinced Helsinki 
that further efforts must be made to build up the nation's air 
defenses in order to demonstrate its determination to resist viola- 
tions of its neutrality. Accordingly, an order was placed with the 
Soviet Union for thirty-five MiG-21Fs and associated Atoll air-to- 
air missiles. Since the MiG fighters did not have an all-weather 
capability, the Finnish air force turned to Sweden for Saab J-35 
Draken 2Jl-weather interceptors; the first of these aircraft were deli- 
vered between 1972 and 1977. Beginning in 1981, the MiG-21bis, 
an all-weather fighter with a more powerful engine, Wcis introduced 
to replace the MiG-21F. It was armed with a more advanced 



328 



National Security 



version of the Atoll missile. Extensive new purchases for the moder- 
nization of the armored forces began in 1981 with the acquisition 
from the Soviet Union of armored personnel csirriers, followed later 
by T-72 tanks, armored transports, and BMP-1 assault tanks. 

By the mid-1990s, the entire combat air force of Draken and 
MiG fighters will need replacing, and observers have surmised that 
the Soviet MiG-29 will be one of the models selected. Financing 
the purchase would be facilitated by the fact that an imbadance had 
developed in Finnish-Soviet trade as a result of the drop in the price 
of Soviet crude oil deliveries. Financing of a Western model, pos- 
sibly the Swedish J AS-39 Gripen, was expected to present a difficult 
budgetary hurdle. 

Finland was eligible to purchase materiel under the Foreign Mili- 
tary Sales Program of the United States Defense Department. Its 
principal acquisitions from the United States were advanced elec- 
tronic equipment and I-TOW (improved tube-launched, optically 
sighted, wire- guided) antitank missiles. 

Domestic Arms Production 

Finland's own production capacity had gradually expanded 
beginning in the 1960s. Among the arms manufactured domesti- 
cally were the M-60 122mm field gun, the M61/37 105mm howit- 
zer, the M-62 assault rifle (a highly regarded redesigned version 
of the Soviet AK-47), and the M-62 light machine gun, the basic 
infantry weapons of the Finnish army. Domestic shipyards turned 
out all of the vessels needed by the navy, although much of their 
advanced electronic equipment and weaponry was imported. 
Earlier, a number of ships had been purchased from the Soviet 
Union and from Britain and had been modified in Finnish yards 
for minelaying and other special requirements. The only aircraft 
entirely of Finnish manufacture was the Valmet L-70 Vinka basic 
trainer. Another Valmet design, the Redigo, had been marketed 
abroad as a basic trainer without success. Analysts expected that 
the Finnish air force would acquire it as a light transport in the 
early 1990s. The British Hawk advanced jet trainer and later con- 
signments of the Draken were assembled at the Valmet plant. 

An all-terrain truck, the KB-45 manufactured by Sisu-Auto 
(SISU), was used by the Finnish army as a gun tractor and per- 
sonnel carrier and by Swedish and Finnish peacekeeping forces in 
the Middle East. SISU also manufactured the SA-150 Masi all- 
terrain truck and the NA-140 Nasu adverse terrain vehicle. The 
SISU A- 180 Pasi, a newly designed six-wheeled amphibious 
armored personnel carrier, had been introduced into the army, and 
severad hundred were on order as of 1988. 



329 



Finland: A Country Study 

By 1988 the Finnish arms industry consisted of about twenty 
firms, most of them small subsidiaries of conglomerates primarily 
oriented toward civilian markets. The Ministry of Defense had its 
own plants for the manufacture of munitions and for the moderni- 
zation of heavy equipment such as the T-55 tank. In addition to 
SISU and Valmet, one of the larger private manufacturers was 
Tampella, which produced field artillery, mortars, turret guns, and 
grenade launchers. Most of the missile boats were constructed by 
the Hollming shipyards in Rauma and at Wartsila's yards in Hel- 
sinki, although their weapons systems were acquired abroad. 

Finnish arms exports were a minor item in the balance of trade, 
amounting to only Fmk60 million in 1986. Nearly half of these 
exports were to NATO countries, most of the remainder going to 
neutral developed countries such as Sweden. About half of the 
export total consisted of gunpowder. Ammunition, artillery shells, 
and assault rifles composed most of the remainder. 

Civil Defense 

Under the Civil Defense Act of 1958, the Ministry of Interior 
was directed to provide civil defense to protect persons and property 
in wartime as weU as in peacetime. The act stipulated that the minis- 
try was to be responsible for providing shelters in high-risk areas, 
for evacuating civilian population from threatened areas, and for 
limiting damage from natural disasters. In emergency situations, 
firefighting, rescue, ambulance, and first-aid services were coor- 
dinated with the civil defense effort. Civil defense operations were 
entirely a civilian responsibility. 

The ministry delegated the implementation of national policy 
to county and municipal authorities, which acted through locally 
appointed civil defense boards. These boards supervised operations 
from more than 100 civil defense centers designated throughout 
the country. Personnel in national and local government agencies, 
committed to civil defense in emergency situations, and in indepen- 
dent voluntary organizations that would come under their juris- 
diction numbered over 100,000. Nongovernment organizations 
involved in civil defense activities included the Finnish Red Cross 
and the Rescue Service. Police were also assigned to reinforce civil 
defense workers as conditions required. 

An alairm system was in place in urban centers to warn the civilian 
population of threatened attacks. During an emergency situation, 
instructions would be broadcast through normsd media channels. 
The early warning civil defense system was tied into the nation- 
wide military air surveillance system. 



330 



Finnish-built L-70 Vinka elementary trainer produced by Valmet 
Courtesy General Headquarters, Finnish Defense Forces 

The Ministry of Interior maintained hard shelters, capable of 
accommodating 2.6 million persons, in cities and in other densely 
populated areas where two-thirds of the country's population lived. 
They were built to withst2ind the detonation of a 100-kiloton nuclear 
bomb at ground zero. There was no shelter program in rural areas 
nor were most detached dwellings and townhouses equipped with 
shelters. About 10 percent of the shelters were carved out of natural 
rock, but most were beneath office and residential buildings. Some 
were designed for multiple use as parking garages, schoolrooms, 
skating rinks, and swimming pools. By law, builders were obliged 
to include shelters in blocks measuring 3,000 cubic meters or more. 
In Helsinki, 536,000 spaces were provided, of which 11 8,000 were 
in large rock shelters and 14,000 were in subway stations. The 
shelter space was sufficient to accommodate over 100 percent of 
the nighttime population of the city, but only 67 percent of the day- 
time population. 

The most serious shortcoming of Finland's civil defense system 
was that 1.5 million Finns had no access to shelters. Another rea- 
son for concern was that many shelters were poorly equipped and 
maintained. All shelters were supposed to be outfitted with self- 
contained power 2ind ventilation systems, sanitary facilities, and 
emergency supplies. Nevertheless, inspections during 1986 found 
that two- thirds of shelters in private buildings had some deficiencies. 



331 



Finland: A Country Study 

Contingency plans included massive evacuation of civilians from 
likely target areas, threatened with attack by conventional forces 
in time of war. Medical services for civilian casualties would be 
provided at local facilities in coordination with the civil defense 
branch of the Ministry of Social Affairs and Health. Civil defense 
authorities considered, however, that evacuation of the civilian 
population to escape fallout following a nuclear attack would be 
pointless, and no provision was made for such a contingency. 

The public's perception of civil defense efforts was marked by 
considerable indifference during the 1980s. Although its system was 
far more complete than the systems in most countries of Western 
Europe, Finland's annuaJ expenditure per capita on civil defense 
of US$12 was well below the rate of other Scandinavian countries, 
which averaged US$20 per capita. The nuclear accident at Cher- 
nobyl in the Soviet Union in 1986 underscored Finland's vulnera- 
bility and triggered renewed concern over shortcomings in the civil 
defense program. In response, the government announced plans 
in 1988 to introduce an automatic radiation surveillance network 
to supplement the existing manual one and to ensure that an out- 
door alarm system was operational in all municipalities. 

Public Order and Security 

Responsibility for law enforcement and for the maintenance of 
public security rested entirely with the central government. No 
police forces were maintained by lower levels of government. The 
minister of interior exercised control over all police forces through 
the Police Department, one of the departments of the Ministry of 
Interior. It functioned as the central command unit supervising 
the two types of ordinary police forces — town police and rural 
police — as well as three special police units, the Central Criminal 
Police (Keskusrikospoliisi — KRP), the Mobile Police (Liikkuva — 
LP), and the Security Police (Suojelupoliisi — SUPO). The total 
personnel complement of the police, as of late 1988, was 8,341, 
of whom approximately 200 were women. 

The RVL, a paramilitary force with responsibilities for guarding 
Finland's borders and for maintaining public order and safety in 
frontier and coastal areas, was also under the supervision of the min- 
ister of interior in peacetime. Its headquarters was the Fron- 
tier Guard Department, a separate division within the ministry. The 
personnel strength of the RVL was roughly half that of the police. 

Police Organization 

Chambers of Police were established in 1816 in Turku, and later 
in other large towns. These chambers had the duty of keeping 



332 



National Security 



order, preventing crimes and breaches of the peace, and acting as 
courts for minor offenses. Although the term "poUce department" 
was officially adopted in 1861, police forces retained their judicial 
powers until 1897. In 1903 and 1904, the town police became part 
of the state administration, although until 1977 towns still had the 
responsibility of contributing one-third of some costs of police 
service. 

In rural areas, provincial governors had traditionally appointed 
sheriffs, often poorly educated and inefficient peasants, who fre- 
quently did not have regular deputies. Only in 1891 did a decree 
provide for each sheriffs office to have a number of state-employed 
constables. The Police Act of 1925 brought town and rural police 
under the same set of regulations. Previous legislation and regula- 
tions pertaining to the police were superseded by the Police Act 
of 1967, a comprehensive law covering all police activities. Amend- 
ments in 1973 established advisory committees of laymen to help 
improve relations between the police and the general public. The 
1973 law also defined the structure of the Police Department in 
the Ministry of Interior. 

The Police Department of the Ministry of Interior was both the 
supreme command of the police and an operational arm for spe- 
cial functions carried on at a centralized level. Among the most 
important of these was directing three special police forces, the 
KRP, the LP, and SUPO (see fig. 24). A superintendent of police 
headed each provincial police office, which had operational com- 
mand over local police units but had no police forces directiy under 
it. Most prosecutors were part of the police system. The provin- 
cial superintendent of police was, at the same time, the provincial 
prosecutor who prosecuted the most serious crimes. Sheriffs were 
local administrative officers, acting as prosecutors in lower courts, 
as debt collectors, and as notaries public. Town police departments, 
headed by police chiefs, numbered twenty- seven in 1988. There 
were 225 mraX police districts headed by sheriffs. 

The organization of individual police departments varied depend- 
ing on the size of the community and on its particular public safety 
problems. Departments generally had sections that dealt with public 
order and safety, accidents, driver's permits, criminal investiga- 
tion, social problems (investigation of crimes against the Narcot- 
ics Act and violations of the Temperance Act), the civil register 
(population records, passports and identity cards, alien supervi- 
sion), and a unit for preventive police work among youth. In com- 
munities large enough to be divided into precincts, the precinct 
officers conducted investigations of minor crimes, placed drunks 



333 



Finland: A Country Study 



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334 



National Security 



in sobering-up cells, and supervised public facilities, including train 
and bus stations. 

Larger rural police districts had similar divisions, with the 
addition of an administrative division to handle permits, debt col- 
lections, fines, and similar matters. The majority of the districts 
were small, however, with a staff of only ten or twelve policemen 
and no divisional organization. 

Central Criminal Police 

The Central Criminal Police (Keskusrikospoliisi — KRP) was 
formed in 1954 to assist the country's other police elements in ef- 
forts against crime, particularly that of a serious or deeply rooted 
nature. A special concern of the Central Criminal Police was white 
collar crime. To carry out its mission, the force had advanced tech- 
nical means at its disposed, and it maintained Finland's fingerprint 
and identification files. In addition to working with local police 
forces, the KRP operated independently throughout the country. 

Mobile Police 

The Mobile Police (Liikkuva Poliisi — LP) was formed in 1930 
to operate throughout the country to prevent smuggling, to con- 
trol highway traffic, and, above all, to be ready at a moment's notice 
to assist local police forces in quelling civil disturbances. With a 
complement of 724, as of 1988, the LP had a department in each 
province and commsmd units in larger communities. Its main func- 
tions, in addition to its responsibility for traffic regulation and 
vehicle inspection, were to prevent the illegal importation and the 
manufacture of alcohol and drugs, to enforce hunting and fishing 
regulations, and to assist other police units in investigations and 
in apprehension of fugitives. The LP also provided security for the 
nation's president, passport control at the Soviet border, and secu- 
rity at the Helsinki international airport. 

Security Police 

The Security Police (Suojelupoliisi — SUPO) had its headquar- 
ters in Helsinki, but it maintained bureau and district offices in 
various parts of Finland, Formed in 1948, it replaced a similzir police 
force dating from the late 1930s. Its function was to investigate 
crimes and offenses against the law and order of the state, includ- 
ing subversion, conspiracy, and espionage. SUPO had, in addi- 
tion, certain responsibilities for safeguarding classified government 
documents and for checking on foreign citizens visiting or work- 
ing in Finland. It conducted liaison with security and intelligence 
organizations of other countries. Agents of SUPO did not have 



335 



Finland: A Country Study 



the right to make arrests or to detain anyone, nor were they autho- 
rized to search private residences. Anyone suspected by SUPO of 
having committed a crime was dealt with by a criminal investiga- 
tion unit. 

The country faced few internal security problems. It continued 
to be a homogeneous nation with only 20,000 foreign residents cind 
an immigration quota of 200 people a year. Admittance was denied 
to job seekers from Third World countries. The few Soviet defec- 
tors who mginaged to escape across the border into Finland were 
carefully screened, and most were sent back. A few were granted 
asylum as political refugees; others succeeded in reaching Sweden 
before being apprehended by Finnish authorities. 

Police Training 

Competition for employment by the police was keen. Fewer than 
10 percent of the average of 3,500 who applied annually were 
accepted for training. Candidates were required to have completed 
secondary school and to have emerged from military service with 
at least an NCO rank. The five-month police cadet course was given 
at the Police Training Center at Tampere. The course was followed 
by twelve to eighteen months of active police work, after which 
policemen returned to the center for six months of further train- 
ing. Completion of this phase led to the rank of senior constable. 

Advanced police training was conducted at the Police Academy 
in Otaniemi near Helsinki. The five-month NCO course provided 
instruction in such fields as police administrative law, criminal law, 
crimin2J trial law, civil law, police tactics, psychology, and foren- 
sic medicine. Those completing the course advanced to the rank 
of sergeant. An eight-month course for officers led to the rank of 
lieutenant, and a four-month conmianding officers' course prepared 
candidates for police chiefs duties. 

Frontier Guard 

The Frontier Guard (Rajavartiolaitos — RVL) was considered 
an elite force, organized, even in peacetime, along military lines 
into companies and platoons; its personnel held military-type ranks. 
The RVL was established in 1919, and it was placed under the 
Ministry of Interior. The Coast Guard (sometimes called the Sea 
Guard), dating from 1930, was also under the Ministry of Interior 
and was made part of the RVL in 1944. In a time of crisis or war, 
authorities could integrate the entire RVL, or parts of it, into the 
Defense Forces. The peacetime tasks of the RVL were to guard 
and to patrol national boundaries; to work with the police in main- 
taining public order and safety in frontier and coastal areas; to 



336 



National Security 



prevent and, if necessary, to investigate frontier incidents; and, 
together with the Customs Office, to exercise customs control. The 
RVL patrolled a special frontier zone of three kilometers on land 
and four kilometers at sea sdong the Finnish-Soviet border. A per- 
mit was required to enter this zone. 

The personnel complement of the RVL, as of 1988, was about 
3,500; an additioned 1,000 conscripts were assigned to it. Coast 
Guard personnel numbered 600; no conscripts served with the Coast 
Guard. The RVL was divided into four districts, and the Coast 
Guard was divided into three. Each district was composed of three 
or four frontier companies, a ranger or commando company, and 
a headquarters platoon. Actual patrolling of the border was con- 
ducted by the frontier companies, which consisted of two to four 
frontier platoons. Each platoon manned one to three RVL stations. 
The ranger companies, which served as training units for the con- 
scripts, were located at the district headquarters. Only career per- 
sonnel participated in regular boundary patrolling. A separate Air 
Patrol Command was equipped with Agusta Bell Jet Ranger light 
helicopters and Aerospatiale Super Puma medium helicopters, the 
latter with an antisubmarine warfare role in wartime. 

Basic training of the RVL was conducted at the Frontier Guard 
School at Immola in the municipality of Imatra and at the Coast 
Guard School at Otaniemi. NCOs received their training mainly 
at the Defense Forces' NCO school; officer training was carried 
out at the Military Academy and at other military schools. Con- 
scripts received their ranger training in the districts where they were 
assigned. Conscripts admitted to the RVL were required to be in 
top physical condition, and they were usually residents of border 
areas. Opportunities offered to RVL conscripts for training as 
reserve NCOs and officers were similar to those offered in the 
Defense Forces (see The Armed Forces, this ch.). 

Under wartime conditions the RVL would be organized into spe- 
cial Frontier Jaeger Battalions. Their mobilized strength would be 
about 1 1 ,500. Their tasks would be to operate against key targets 
in the enemy's rear and to defend against enemy airborne or other 
penetration of Finnish rear areas. The Coast Guard did not have 
a reserve component, but several of its larger patrol craft had a 
submarine tracking capability, and they could be rapidly converted 
for antisubmarine warfare and minelaying and minesweeping oper- 
ations. 

Each Coast Guard district consisted of a headquarters platoon, 
three Coast Guard areas (each comprising two to six Coast Guard 
stations), and Coast Guard vessels. Its fleet consisted of 7 offshore 



337 



Finland: A Country Study 

patrol craft of between 135 and 700 tons displacement and 53 
smaller coastal patrol craft. 

Criminal Justice System 

The Swedish penal code was retained in Finland untU 1889, when 
the Grand Duchy of Finland adopted a new code that was derived 
from the familiar Swedish practice but allowed for more precise 
definition of crimes. Judges were given considerable latitude in in- 
terpreting the law, but the new code limited the punishments that 
could be exacted for particular categories of offenses. Although fre- 
quendy amended over the ensuing decades, the Penal Code of 1889 
remained in force in the 1980s. In 1977 the government autho- 
rized establishment of the Penal Law Committee to study the sys- 
tem of corrections and to reconsider the principles on which criminal 
policy was based in order to make recommendations for revisions 
in the penal code. No action had been taken on penal code reform 
as of 1988, however. 

Principles of Criminal justice 

Finnish thinking on criminal policy as it evolved in the 1980s 
regarded the punishment of offenders essentially as society's 
reproach to the criminal. In the abstract, the type and the length 
of punishment prescribed by law were considered indicative of the 
norms of society regarding the seriousness of the offense and the 
potential threat posed to society by the offender. In practical terms, 
punishments were standardized, and they were imposed consistendy 
for all categories of crimes, in the interest of ensuring equality in 
the application of the law. For this reason, the penal code restrict- 
ed the discretionary power of the courts in imposing sentences. 

Imprisonment was not regarded as benefiting the offender, nor 
was the length of time in an institution to be set on the basis of 
need for treatment; it was accepted that punishment was detrimental 
and should be used sparingly. Thus, the tendency has been to rely 
on light punishment, especially on fines, and to emphasize short 
sentences of a few weeks or months. 

In addition to ensuring that sentences were equal and propor- 
tional, the penal code advised that sentences imposed should not 
cause the "unregulated accumulation of sanctions," that is, when 
assessing punishment, courts should avoid severad ssinctions' be- 
ing imposed — such as dismissal from office, or revocation of a 
driver's permit — as the result of a single offense. The courts were 
zdso expected to ensure that punishment was not extended indirectiy 
to the offender's family. 

The tendency since the early 1970s has been to decriminalize 



338 



Frontier Guards in bivouac during winter patrol 
Courtesy General Headquarters, Finnish Defense Forces 
Ski troops towed by a Swedish-built Bandvagn 
206 multipurpose tracked vehicle 
Courtesy General Headquarters, Finnish Defense Forces 



339 



Finland: A Country Study 



a number of actions formerly indictable under the penal code. The 
modifications in the code reflected changing priorities in assessing 
the seriousness of criminal conduct, changing norms of social 
behavior, and an attempt to distinguish between premeditated crime 
and spontaneous actions. Among the acts decriminalized were creat- 
ing a public disturbance because of drunkenness as well as certain 
offenses against property, such as petty theft. Homosexual acts 
between consenting adults also ceased to be regarded as a crimi- 
nal offense. Stiff penalties for offenses against persons, for threa- 
tened violence against persons, and for drunken driving remained 
unaffected, however. 

Finland has been less willing than other Scandinavizin countries 
to replace punishment with other measures, such as treatment- 
oriented institutions for repeat offenders. Under legislation enacted 
in 1931, offenders ''dangerous to private or public safety" could 
be confined in a separate institution for recidivists after their sen- 
tences had expired. In 1971 the law was amended so that property 
offenses could no longer be considered grounds for indeterminate 
incarceration, and conditions under which violent offenders could 
be so confined were more narrowly defined. As a result, the num- 
ber of offenders held in internment of any kind fell dramatically, 
from nearly 400 in the 1960s to fewer than 10 in 1984. 

Criminal Courts 

Criminal courts of the first instance were of two types, each hav- 
ing jurisdiction in distinct areas and each following separate proce- 
dures. The first type of court provided criminal justice in thirty 
"old towns," including Helsinki. These long-established town 
courts consisted of three professionad judges — one of whom 
presided — and two lay jurors from the city council. Circuit courts, 
the second type, exercised jurisdiction in rural districts and in cities 
incorporated after 1958. The latter category included Espoo and 
Vantaa, Finland's fourth and fifth largest cities, respectively, located 
in the greater Helsinki metropolitan area. More than 140 circuit 
courts in 71 judicial districts formed this system. Circuit courts were 
conducted by a professional judge, assisted by five to seven jurors 
elected for the term of the court by the local municipal council. 
Public prosecutors for both kinds of courts determined whether to 
press charges against persons accused of offenses solely on the basis 
of evidence presented by police investigation. 

Criminal cases were heard in continuous sessions by both types 
of courts of the first instance. Verdicts were determined by the vote 
of the panel of judges and jurors. A two-to-one majority was suffi- 
cient in three-member town courts. In circuit courts, however, the 



340 



National Security 



verdict of the presiding judge prevailed if the jurors failed to reach 
a unanimous decision. Measures were pending in 1988 to har- 
monize court procedures. 

Cases involving criminal offenses by on-duty members of the 
Defense Forces were tried in fifteen speciad courts of the first in- 
stance presided over by a panel of military judges. These courts- 
martial were integrated into the criminal courts system. 

Appeals from the courts of the first instance were heard in six 
three-member regional courts of appeal that were also responsible 
for supervising the lower courts. When a panel considered appesds 
from courts-martial, two military judges were added. About two- 
thirds of the business of appeals courts involved criminal cases. The 
Supreme Court, which ordinarily sat in panels of five members, 
handled final appeals from criminal cases. Permission to appeal 
was, however, granted by a three-member panel. Because of a ten- 
dency by the Supreme Court to limit the cases reviewed to those 
having vadue as precedents, the courts of appeal had become 
increasingly important in criminal matters. 

Criminal actions were preceded by a police pretrial investiga- 
tion. A suspect could be detained by the police for questioning, 
without access to a lawyer, for three days; this period could be 
extended to fourteen days, for special reasons on proper authority 
and with notification to the court. Reforms scheduled to take effect 
on January 1, 1989, shortened the maximum detention to seven 
days, with access to a lawyer. The institutions of habeas corpus 
and bail did not exist as such. Those accused of serious crimes were 
required to remain in custody. Those accused of minor offenses 
could be released on person2d recognizance at the court's discre- 
tion. Preventive detention was authorized only during a declared 
state of war for variously defined offenses, such as treason or 
mutiny. 

Court proceedings were conducted by the presiding judge, who 
norm2dly also questioned witnesses. The entire written court record 
was used as the basis for proceedings in the courts of appeals. Oral 
hearings were conducted only in those criminal cases in which courts 
of appeal had original jurisdiction, such as criminal charges against 
certain high officials. Neither the accused nor his counsel was 
present when a case was considered by the court of appeal. An 
accused person had the right to effective counsel. Persons lacking 
sufficient funds were entitled to free proceedings so that their 
attorneys' fees 2ind direct costs were borne by the state. Local courts 
could decide to conduct a trigd behind closed doors in juvenile, 
domestic, or guardianship cases, or when publicity would offend 
mor2dity or endanger state secrets. 



341 



Finland: A Country Study 

Incidence of Crime 

According to official Finnish data for 1986, the largest group 
of crimes covered by the Criminal Code was crimes against property 
(75 percent of the total); theft alone accounted for 42 percent, and 
embezzlement and fraud for 15 percent. Drunken driving constitut- 
ed 9 percent of all Criminal Code violations, and crimes against 
personal safety, mostly assaults, accounted for 7 percent. 

During the 1970s, the crime rate showed a rising trend cor- 
responding to the growing affluence of the country and to the shift 
in population from the rural north to the urban south. After the 
mid-1970s, however, the rate for many crime categories leveled 
off; in some cases it even fell. Robberies decreased during the 1980s, 
and bank robberies were infrequent, only sixteen cases being record- 
ed in 1986. Assaults increased somewhat during the same period, 
roughly parallel to the increase in alcohol consumption. Embez- 
zlements and fraud increased noticeably, in part as a consequence 
of the mass introduction of credit cards in the 1980s. Drunken driv- 
ing offenses slackened off relative to the number of automobiles, 
from a rate of 161 per 100,000 cars in 1977 to 122 per 100,000 
cars in 1985. This was due both to stricter controls and to an abso- 
lute decrease in the number of drunken drivers. 

In 1986 the number of murder and manslaughter cases inves- 
tigated by the police amounted to 143. The homicide rate of 3 per 
100,000 of population was considered to be high by European stan- 
dards. Finland's rate of assault was more than three times the rate 
of Denmark and Norway, but similar to that of Sweden. Finland, 
however, experienced the lowest theft rate of all the Scandinavian 
countries; this appeared to be explained by differentials in the lev- 
el of prosperity, urbanization, cind population density among the 
nations. Finland was also lowest in narcotic offenses (see Drug En- 
forcement, this ch.). 

Sentencing and Punishment 

Prison sentences for criminal offenses were of three kinds: fully 
fixed terms of fourteen days to three months; fixed terms of three 
months to twelve years, with the possibility of release on parole 
for the equivalent of the remainder of the original sentence; and 
life terms, which had no minimum time but which allowed release 
only upon pardon by the president. Courts could also render a con- 
ditional sentence, specifying a term of imprisonment, but estab- 
lishing a probation period for the same duration. If no new offense 
was committed, the execution of the sentence would be considered 
complete. 



342 



National Security 



Since the early part of the nineteenth century, capital punish- 
ment has been virtually abolished in practice. After Finland's 
independence in 1918, capitcd punishment was only enforced in 
wartime, although it was not until 1949 that it was formally 
proscribed in peacetime. In 1972 executions were abolished. In prac- 
tice, life imprisonment was reserved for the crime of murder. As 
of the end of 1984, only twenty- seven prisoners were serving life 
terms. Those under life sentence were generally pardoned after ten 
or fifteen years. The average number of convictions for murder 
had been steadily diminishing, from forty-six annually in the early 
1920s to eleven in the late 1970s. 

Fines were the most common form of punishment, constituting 
90 percent of all sentences when minor traffic offenses were 
included. In addition to traffic offenses, fines were commonly 
applied in cases of petty theft and petty assault. The actual amount 
of a fine depended on the income and wealth of an individual. Thus, 
a fine for speeding, normally about US$70, could be assessed at 
US$20 for an indigent and at well over US$1,000 for a single per- 
son with a high salary. 

Of 299,000 persons sentenced in 1986, less than 9 percent 
(26,000) were given prison terms, of whom fewer than half (11 ,300) 
received unconditional sentences. The remainder were sentenced 
to a fine together with a conditional prison term. A considerable 
proportion of the latter category were persons convicted of aggra- 
vated drunken driving. The median length of unconditional pris- 
on sentences was 4.1 months in 1985. Typical sentences were, for 
theft, 3.4 months; for forgery, 8.0 months; for robbery, 9.5 months; 
for aggravated assault, 8.7 months. About 95 percent of sentences 
were for under 2 years. 

The daily average prison population was marked by a down- 
ward trend, from 5,600 in 1976 to about 4,200 in 1986. But the 
prisoner rate of 86 per 100,000 of population in 1986 was still much 
higher than rates in other Nordic countries and in Western Europe 
in general. Since the crime rate in Finland was rather low in com- 
parison with the other Nordic countries, it appeared that the higher 
rate of incarceration was the result of a high rate of solved crime, 
a greater use of unconditional sentencing, and longer prison terms. 

There were two types of prisons — closed prisons and open insti- 
tutions. The latter were classified as either permanently located 
open prisons or as labor colonies established for a limited period 
of time for the performance of certain work. Sentences for the non- 
payment of fines as well as sentences of up to two years were served 
in open institutions, if the prisoner was physically able to perform 
the work and if the danger of escaping was minimal. 



343 



Finland: A Country Study 

The criminal justice system applied only to offenders over the 
age of fifteen. Those under that age were placed under the custo- 
dy of child welfare authorities. Juveniles between fifteen and eigh- 
teen years of age were customarily accorded a reduced sentence, 
and offenders between fifteen and twenty-one were more likely than 
adults to receive conditional sentences. Those in this age group 
who were sentenced to an unconditional term of six months to four 
years might be sent to a special juvenile prison. Such institutions 
were meant to have a training and education function, but in prac- 
tice they did not differ gready from ordinary prisons. 

Drug Enforcement 

Narcotics abuse and trafficking were relatively small problems, 
ranking below other social problems, such as alcohol abuse. The 
narcotics units of the KPR were responsible for overseeing drug 
enforcement throughout the country. Altogether, there were about 
150 officers working in drug enforcement, half of whom were 
attached to the Helsinki police. Drug seizures by police numbered 
200 to 300 cinnually, but they accounted for only about 3 percent 
of the drugs consumed in the country. About half of the seizures 
consisted of heroin. Police estimated that more than 60 percent of 
all illicit narcotics entering Finland in the late 1980s had originated 
in Denmark. The most common carriers were returning Finnish 
workers living outside the country, particularly in Sweden. 

Finnish laws prohibited the use, the possession, and the sale of 
any drugs that were not approved pharmaceutical products, and 
the laws dealt severely with all drug-related offenses. No formal 
distinction was made regarding the quantity or the potency of drugs 
involved or regarding whether possession was for personal use or 
for sale. In practice, courts assessed penalties according to the type 
of drug; first offenders, possessing drugs for personal use alone, 
usually received probation and/or a fine. The annual number of 
sentences for narcotics offenses ranged from 369 in 1981 to 1,070 
in 1985. Nearly half of these cases involved only drug use, the prin- 
cipal drug (73 percent of offenses) being marijuana. Although the 
number of persons sentenced was obviously rising, observers 
believed that the use of narcotics was diminishing. The higher surest 
rate was a result of a widened definition of what constituted a nar- 
cotics offense and to more effective police control. 

* * * 

A comprehensive overview of the contemp>orary organization and 
doctrine of the Finnish Defense Forces can be found in the 1988 



344 



National Security 



work by Tomas Ries, Cold Will: The Defence of Finland. The first 
part of this study provides an account of the combat experience 
of the armed forces in the Civil War of 1918 and in the Winter 
War and Continuation War of 1939-44. Friedrich Wiener's Die 
Armeen der neutralen und blockfreien Staaien Europas provides complemen- 
tary information on the configuration of the Defense Forces, 
together with photographs and technical data on weapons and 
vehicles. The Military Balance, 1988-89, produced by the Interna- 
tional Institute for Strategic Studies in London, contains an 
up-to-date listing of the Finnish arms inventory. 

Fundamentals of Finnish defense strategy, together with the 
organization of national defense and the structure of the individual 
services, are summarized in a concise official Ministry of Defense 
publication, Finnish National Defence. Although its appraisal of the 
strengths and the weaknesses of the armed forces is no longer cur- 
rent, the Report of the Third Parliamentary Defence Committee (1981) 
contains a useful analysis of Finland's security policy and its stra- 
tegic position in Northern Europe. Aspects of Security: The Case of 
Independent Finland, produced by the Finnish Military History Com- 
mission, traces the development of the Defense Forces from in- 
dependence in 1917 to 1985, reviewing Finnish strategy and tac- 
tics in the campaigns of 1939 to 1944. 

Numerous studies have analyzed Finland's military role in North- 
em Europe and the defense of Scandinavia. Nordic Security by Erling 
Bjol, although brief, examines the common geostrategic issues of 
the region and the diversified approach to security adopted by each 
of the five Nordic countries. 

The organization and missions of the Frontier Guard and the 
police are summarized in two short official publications, The Frontier 
Guard in Finland and The Police of Finland. The Finnish Legal System, 
edited by Jaakko Uotila, contains background on the Finnish sys- 
tem of justice and, in an article by Inkeri Anttila, a discussion of 
criminal law and punishment. (For further information and com- 
plete citations, see Bibliography.) 



345 



Appendix A 



Table 

1 Metric Conversion Coefficients and Factors 

2 Finnish and Swedish Names of the Provinces and of Selected 

Place-names 

3 Presidents of Finland, 1919- 

4 Distribution of Parliamentary Seats, 1966-87 

5 Coalition Governments, 1966- 

6 Parliamentary Election Results, 1979-87 

7 National Population and Percentage Living in the Urban 

Muncipalities, Selected years, 1800-1985 

8 Population by Province, Selected Years, 1960-85 

9 Finnish Social Welfare Expenditures, Selected Years, 1974-85 

10 Social Expenditures, 1980 and 1985 

1 1 Health Care Personnel and Facilities, Selected Years, 1960-85 

12 Sex and Age Specific Death Rates by Cause, 1981-85 

13 Gross Domestic Product (GDP), by Sector, Selected Years, 

1950-86 

14 Central Government Budget, 1982-86 

15 Labor Force, Selected Years, 1950-85 

16 Production of Major Form Commodities, Selected Years, 

1980-86 

17 Use of Arable Land, Selected Years, 1950-85 

18 Industrial Production by Commodity, 1982-86 

19 Geographical Distribution of Trade, 1982-87 

20 Balance of Payments, 1978-86 

21 Daily Newspapers with Largest Circulations, 1986 

22 Major Army Equipment, 1988 

23 Major Naval Equipment, 1988 

24 Major Air Force Equipment, 1988 



347 



Appendix A 



Table 1. Metric Conversion Coefficients and Factors 



When you know Multiply by To find 



Millimeters 0.04 inches 

Centimeters 0.39 inches 

Meters 3.3 feet 

Kilometers 0.62 miles 

Hectares (10,000 m^) 2.47 acres 

Square kilometers 0.39 square miles 

Cubic meters 35.3 cubic feet 

Liters 0.26 gallons 

Kilograms 2.2 pounds 

Metric tons 0.98 long tons 

1.1 short tons 

2,204 pounds 

Degrees Celsius 9 degrees Fahrenheit 

(Centigrade) divide by 5 

and add 32 



349 



Finland: A Country Study 



Table 2. Finnish and Swedish Names of the Provinces 
and of Selected Place-names 



Finnish 



Swedish 



Provinces 



Ahvenanmaa 
Hame 

Keski-Suomi 

Kuopio 

Kymi 

Lappi 

Mikkeli 

Oulu 

Pohjois-Karjala 
Turku ja Fori 
Uusimaa 
Vaasa 



Aland 

Tavastehus 

Mellersta Finland 

Kuopio 

Kymmene 

Lappland 

St. Michel 

Uleaborg 

Norra Karelen 

Abo och Bjorneborg 

Nyland 

Vasa 



Flace-names 



Espoo 

Hameenlinna 

Hamina 

Hanko 

Helsinki 

Kaskinen 

Kokkola 

Lahti 

Lappeenranta 
Loviisa 

Maarianhamina 
Fori 

Pietarsaari 

Forvoo 

Rajihe 

Saimaa 

Savonlinna 

Tammissari 

Tampere 

Tomio 

Turku 

Uusikaarlepyy 
Uusikaupunki 
Vaasa 
Vantaa 



Esbo 

Tavastehus 

Fredrikshamn 

Hango 

Helsingfors 

Kasko 

Gamlakarleby 
Lahtis 

Villmanstrand 

Lovisa 

Mariehamn 

Bjorneborg 

Jakobstad 

Borga 

Brcihestad 

Saima 

Nyslott 

Ekenas 

Tammerfors 

Tornea 

Abo 

Nykarleby 
Nystad 
Vasa 
Vanda 



350 



Appendix A 



Table 3. Presidents of Finland, 1919- 



Name 


Years in Office 


Former Party Allegiance 




1919-25 


Young Finn 




1925-31 


Agrarian 




1931-37 


National Coalition 


Kyosti Kallio 


1937-40 


Agrarian 


Risto Ryti 


1940-44 


National Progressive 




1944-46 


none 




1946-56 


National Coalition 




1956-81 


Center 




1982-00 


Social Democratic 



Table 4. Distribution of Parliamentary Seats, 1966-87 

Party 1966 1970 1972 1975 1979 1983 1987 

Finnish Social Democratic 

Party (SDP) 55 52 55 54 52 57 56 

National Coalition Party 

(KOK) 26 37 34 35 47 44 53 

Center Party (Kesk) 49 36 35 39 36 38 40 

Finnish People's Democratic 

League (SKDL) 41 36 37 40 35 26 20 

Swedish People's 

Party (SFP) 12 12 10 10 9 10 12 

Finnish Rural 

Party (SMP) 1 18 18 2 7 17 9 

Finnish Christian 

League (SKL) 1 4 9 9 3 5 

Liberal People's 

Party (LKP) 9 8 7 9 4 

Social Democratic Union 
of Workers and Small 

Farmers (TPSL) 7 

Others 2 1 5 5 

TOTAL 200 200 200 200 200 200 200 

Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook 
of Finland, 1987, Helsinki, 1987, 426. 



351 



Finland: A Country Study 



Table 5. Coalition Governments, 1966- 



Prime Minister 

Date of Nomination (Party Affiliation ') Coalition Parties ' 



May 27, 1966 Rafael Paasio (SDP) SDP, Kesk, SKDL, TPSL, 

March 22, 1968 Mauno Koivisto SDP, Kesk, SKDL, TPSL, 

(SDP) SFP 

May 14, 1970 Teuvo Aura (none) civil-service caretaker 

July 15, 1970 Ahti Karjalainen SDP, Kesk, SKDL, LKP, 

(Kesk) SFP ^ 

October 29, 1971 Teuvo Aura (none) civil-service caretaker 

February 23, 1972 Rafael Paasio (SDP) SDP 

September 4, 1972 Kalevi Sorsa (SDP) SDP, Kesk, SFP, LKP 

June 13, 1975 Keijo Liinamaa (none) civil-service caretaker 

November 30, 1975 Martti Miettunen SDP, SKDL, Kesk, SFP, 

(Kesk) LKP 

September 29, 1976 Martti Miettunen Kesk, LKP, SFP 

(Kesk) 

May 15, 1977 Kalevi Sorsa (SDP) Kesk, SDP, SKDL, LKP, 

SFP' 

May 25, 1979 Mauno Koivisto Kesk, SDP, SKDL, SFP 

(SDP) 

February 19, 1982 Kalevi Sorsa (SDP) Kesk, SDP, SKDL, 

SFP* 

May 6, 1983 Kalevi Sorsa (SDP) SDP, Kesk, SMP, SFP 

April 30, 1987 Harri Holkeri SDP, KOK, SMP, SFP 

(KOK) 



' For full names of political parties, see Table 4. 

2 After March 26, 1971, this government consisted of the SDP, Kesk, LKP, SFP. 

' After March 2, 1978, this government consisted of the Kesk, SDP, SKDL, and LKP. 

♦ After December 30, 1982, this government consisted of the Kesk, SDP, and SFP. 

Source: Based on information from David Arter, Politics and Policy-Making in Finland, New 
York, 1987, 54; and Juhani Mylly and R. Michael Berry (eds.). Political Parties 
in Finland, Turku, Finland, 1984, 189. 



352 



Appendix A 



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353 



Finland: A Country Study 



Table 7. National Population and Percentage Living 
in Urban Municipalities, Selected Years, 1800-1985 



Percentage Living in 

Year Population Urban Municipalities 



1800 832,700 5.6 

1850 1,636,900 6.4 

1900 2,655,900 12.5 

1920 3,147,600 16.1 

1940 3,695,600 26.8 

1950 4,029,800 32.3 

1960 4,446,200 38.4 

1970 4,598,300 50.9 

1980 4,787,800 59.8 

1985 4,910,700 59.8 



Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook 
of Finland, 1987, Helsinki, 1987, 38. 



Table 8. Population by Province, Selected Years, 1960-85 
(in thousands) 



Province 


1960 


1970 


1980 


1985 




21.0 


20.7 


22.8 


23.6 




580.8 


635.7 


664.3 


667.8 




245.0 


238.0 


242.9 


247.7 




270.5 


255.5 


252.1 


256.0 




337.8 


343.9 


344.3 


340.7 




205.1 


197.1 


194.9 


200.9 


Mikkeli 


234.6 


219.2 


208.6 


209.0 


Oulu 


407.0 


401.2 


416.9 


432.1 




207.7 


185.3 


176.7 


177.6 




, , 660.3 


675.1 


703.0 


713.0 




832.9 


1,005.2 


1,128.5 


1,187.9 


Vaasa 


443.5 


421.4 


432.8 


444.4 



Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook 
of Finland, 1987, Helsinki, 1987, 39. 



354 



Appendix A 



Table 9. Finnish Social Welfare Expenditures, 
Selected Years, 1974-85 



Social Welfare Index of 

Amount Expenditure Per Per Capita Social 

(in millions of As a Percentage of Capita (in Welfare Expenditure 

Year Finnish marks ') GDP ' Finnish marks ') (1980 = 100) 



1974 14,168 15.7 3,021 70 

1976 23,863 20.3 5,049 87 

1978 31,557 22.0 6,639 95 

1980 40,042 20.8 8,377 100 

1982 55,433 22.5 11,484 112 

1984 72,300 23.4 14,810 124 

1985 82,799 24.6 16,891 134 



' For value of the Finnish mark — see Glossary. 
* GDP — gross domestic product. 

Source: Based on information from Nordic Council of Ministers, Nordic Statistical Secre- 
tariat, Yearbook of Nordic Statistics, 1987, Copenhagen, 1988, 316-17. 



Table 10. Social Expenditures, 1980 and 1985 
(in millions of Finnish marks) * 



Item of Expenditure 1980 1985 



Health 10,717 23,157 

Industrial injury insurance and occupational safety 578 1,139 

Unemployment 2,658 5,589 

Pensions, old-age, invalidity, etc 17,899 36,050 

Family and child welfare 4,468 9,915 

General assistance 203 814 

Benefits to military and war casualties 1,094 2,237 

Estimated tzix deduction for children 701 1,156 

Administrative costs 1,286 2,742 



TOTAL 39,604 82,799 



• For value of the Finnish mark — see Glossary. 

Source: Based on information from Nordic Council of Ministers, Nordic Statistical Secre- 
tariat, Yearbook of Nordic Statistics, 1982, Copenhagen, 1983, 278-79; and Nordic 
Council of Ministers, Nordic Statistical Secretariat, Yearbook oj Nordic Statistics, 1987, 
Copenhagen, 1988, 313-14. 



355 



Finland: A Country Study 

Table 11. Health Care Personnel and Facilities, 



Selected Years, 1960-85 




lyou 


iQ7n 


1 QQA 


lyoD 




O Q07 


A 1C\0 

4-, /yo 


9,l)lD 


11,074 




1 '\(^^ 


you 




A.A.A. 




1 nno 


z,Dyj 


o,yoo 


*,DyD 




.... 12,083 


20,783 


28,432 


43,989 




532 


562 


565 


577 




348 


357 


349 


372 




.... 41,027 


52,264 


58,599 


60,958 




2,570 


3,145 


3,087 


3,068 




, , . 521,336 


786,769 


954,577 


984,074 


Hospital occupancy rate 












91 


93 


85 


82 




26.2 


21.9 


19.1 


18.3 



' Includes all qualified persons under age sixty, active and inactive. 
* 1983 figures. 



Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook 
of Finland, 1987, Helsinki, 1987, 368, 370. 



Table 12. Sex and Age Specific Death Rates by Cause, 1981-85 
(Deaths per 100,000 mean population) 



Age 



Cause of Death 


0-34 


35-44 


45-54 


55-64 


65 + 


All 


Cardiovascular diseases 


7.8 


83.2 


372.8 


1,075.5 


9,191.2 


514.3 


Cancer 


8.5 


33.8 


137.4 


502.7 


3,566.5 


211.8 




31.1 


47.3 


103.6 


224.6 


3,144.9 


169.9 




65.5 


134.2 


170.3 


175.4 


543.0 


114.1 




112.9 


298.5 


784.1 


1,978.2 


16,445.6 


1,010.1 


Cardiovascular diseases 


2.6 


21.7 


71.9 


287.0 


6,515.2 


484.4 




6.6 


38.9 


113.6 


271.0 


1,720.0 


173.8 




23.5 


20.6 


42.3 


110.1 


2,055.8 


157.3 


Violent deaths * 


15.7 


28.4 


40.6 


45.2 


278.6 


29.6 




48.4 


109.6 


268.4 


713.3 


10,569.6 


845.1 



* Includes suicides, accidents, and poisonings. 

Source: Based on information from Nordic Council of Ministers, Nordic Statistical Secretziri- 
at. Yearbook of Nordic Statistics, 1987, Copenhagen, 1988, 66-67. 



356 



Appendix A 



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357 



Finland: A Country Study 



Table 14. Central Government Budget, 1982-86 
(in millions of Finnish Marks ^) 





1982 


1983 


1984 


1985 


1986 * 


Current revenue 

Income from property and 
Other domestic current 


16,953 
33,206 

1,936 

2,822 
54,917 


19,298 
36,975 

2,228 

3,301 
61,802 


22,225 
43,530 

2,649 

3,858 
72,262 


25,384 
47,803 

2,986 

4,638 
80,811 


30,015 
52,498 

2,812 

4,269 
89,594 


Current expenditure 
Purchase of goods and 

Property income payable .... 
TOTAL (current exp)enditure) . . 


15,044 
7,377 
2,171 
26,703 
51,295 


17,371 
8,459 
3,096 
32,409 
61,335 


18,374 
9,340 
3,824 
35,984 
67,522 


20,672 
9,878 
4,575 
40,471 
75,596 


21,973 
10,990 
4,582 
43,267 
80,812 


GROSS SAVING 


3,622 
1,037 
4,659 


467 
1,172 
1,639 


4,740 
1,223 
5,963 


5,215 
1,353 
6,568 


8,782 
1,487 
10,269 


Capital investment 
Gross fixed capital 

Purchases of land, net 

TOTAL (capital investment) . . . 


3,268 
170 
254 

3,692 


3,822 
216 
335 

4,373 


3,758 
134 
232 

4,124 


4,024 
156 
193 

4,373 


4,321 
156 
350 

4,827 


Surplus on current and fixed 
Capital transfers to other 


967 
-1,849 


-2,734 
-1,625 


1,839 
-1,732 


2,195 
-1,805 


5,442 
-1,699 




-882 


-4,359 


107 


390 


3,743 



' For value of the Finnish mark — see Glossary. 
Provisional figures. 



Source: Based on information from Organisation for Economic Co-operation and Develop- 
ment, Finland, Paris, April 1988, 113. 



358 



Appendix A 



Table 15. Labor Force, Selected Years, 1950-85 
(in thousands of persons) 





1950 


1960 


1970 


1980 


1985 


Liabor lorce 












Employed 












Agriculture, forestry, 














909 3 


720.8 


429.0 


27Q 9 


241 .8 


TnHiicffv 


412 7 


439.3 


549.5 


584.7 


554.2 




125.4 


176.2 


176.8 


156.7 


168.4 




187.6 


276.4 


399.8 


425.8 


483.4 


Transportation, com- 












munications, etc 


106.7 


128.8 


150.2 


175.7 


172.6 




214 2 


285.5 


383.9 


550.1 


648.9 


Other 


28.4 


6.2 


29.0 


50.7 


7.5 


Totzil employed 


1,984.3 


2,033.2 


2,118.2 


2,222.9 


2,276.8 


T Tri<*nnrjlrivpH 






144.7 


114.0 


139.1 




n.a. 


n.a. 


2,262.9 


2,336.9 


2,415.9 


PnTMilatinn 


4 029 8 


4 446.2 


4 598.3 


4 787.8 


4 910.7 


Working-age population 












(15-75) 


2,740.7 


3,003.0 


3,354.4 


3,625.1 


3,711.4 


Labor force participation 














n.a. 


n.a. 


67.5 


64.5 


65.1 


Unemployment rate 














n.a. 


n.a. 


6.4 


4.9 


5.8 



n.a. — Not available. 



Source: Based on information from Finland, Centrjil Statistical Office, Statistical Yearbook 
of Finland, 1985-86, Helsinki, 1986, 6, 44, 302, and additional information from 
Embassy of Finland, Washington. 



359 



Finland: A Country Study 



Table 16. Production of Major Farm Commodities, 
Selected Years, 1980-86 
(in thousands of tons) 



Commodity 1980 1985 1986 



Grains 

Barley 1,534 1,854 1,714 

Oats 1,258 1,218 1,174 

Rye 124 72 70 

Wheat 357 473 529 

Other Grains 28 27 32 

Oilseeds 

Rapeseed 88 95 105 

Root crops 

Potatoes 736 600 700 

Sugar Beets 900 704 843 

Fruits and vegetables 

Apples 8 10 10 

Tomatoes 20 20 20 

Animal products 

Beef and Veal 112 125 124 

Cow's mUk 3,277 3,083 3,044 

Eggs 79 85 81 

Mutton and Lamb 1 1 1 

Pork 169 171 172 

Poultry 15 20 21 



Source: Based on information from United States, Department of Agriculture, Economic 
Research Service, World Indices of Agricultural and Food Production, 1976-1985, 
Washington, 1986, 58, and additional data from the Economic Research Service. 



360 



Appendix A 



Table 17. Use of Arable Land, Selected Years, 1950-85 
(in thousands of hectares) 



Crop 


1950 


1960 


1970 


1980 


1985 


Grains 














115.1 


212.7 


403.5 


533.4 


645.7 




437 4 


490.3 


524.3 


447.8 


41 1.3 






1 1 ft 7 
1 lU. / 


00.17 


Do. 3 


^ft Q 


Wheat 


188.7 


180.8 


175.5 


124.3 


157.0 




14.7 


24.3 


27.7 


12.1 


9.2 


Oilseeds 


















o.o 


J J. J 


'i? 7 


Root crops 














95.8 


86.4 


60.1 


40.9 


39.4 




10.1 


14.9 


14.9 


31.7 


31.2 


Animal feed 












Fodder 


21.8 


15.2 


13.6 


n.a. 


n.a. 


Hay 


1,001.4 


1,139.0 


873.3 


477.8 


397.7 




20.9 


12.1 


52.3 


233.6 


222.9 




220.9 


237.8 


230.7 


203.3 


169.8 




92.8 


69.7 


170.9 


246.9 


167.9 


Fallow 


78.0 


56.7 


47.8 


102.3 


69.7 


TOTAL 


2,430.9 


2,654.0 


2,667.1 


2,562.7 


2,410.4 



n.a. — Not available. 

Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook 
of Finland, 1985-86, Helsinki, 1986, 84-85. 



361 



Finland: A Country Study 

Table 18. Industrial Production by Commodity, 1982-86 

Year 



Commodity Unit 1982 1983 1984 1985 1986 
Wood products 

CeUiilose 1,000 tons 4,048 4,384 4,743 4,734 4,686 

Fiberboard -do- 136 137 140 109 86 

Mechanical pulp for 

sale -do- 36 31 37 34 37 

Paper and paperboard . . . -do- 5,752 6,295 6,661 7,412 7,491 

Plywood and veneers 1,000 m' 537 582 551 513 568 

Sawn goods -do- 5,822 7,327 7,611 6,350 6,449 

Chemicals 

Fertilizers 1,000 tons 1,511 1,755 1,778 1,752 1,669 

Nitric acid -do- 409 541 545 484 508 

OU products -do- 8,602 9,010 8,765 8,880 7,841 

Sulphuric acid -do- 1,032 1,149 1,165 1,439 1,359 

Metal products 

Copper cathodes -do- 48.0 55.4 57.3 58.8 64.2 

Crude steel -do- 2,414 2,416 2,632 2,519 2,588 

Hot rolled steel 

products -do- 1,847 1,964 1,985 2,063 1,996 

Nickel cathodes -do- 12.3 14.5 15.3 15.7 17.8 

Pig iron -do- 1,944 1,898 2,034 1,890 1,979 

Zinc -do- 155 155 159 160 155 

Other 

Cement -do- 1,907 1,979 1,692 1,623 1,261 

Cotton fabrics -do- 16.6 17.2 16.5 9.1 8.1 

Source: Based on information from Economist Intelligence Unit, Country Profile: Finland, 
1988-89, London, 1988, 18. 



362 



Appendix A 



Table 19. Geographical Distribution of Trade, 1982-87 
(in percentage of tot2il value of imports or exports) 

1982 1983 1984 1985 1986 1987 



Exports 





^4. Q 




^7 Q 


^7 n 




4.9 9 


EFTA 2 


19.2 


18.2 


19.2 


19.7 


22.0 


22.7 




28.8 


27.7 


20.8 


23.4 


22.0 


17.1 




26.7 


26.1 


19.0 


21.5 


20.3 


15.4 




12.0 


12.3 


12.3 


13.2 


14.8 


15.0 




10.8 


10.3 


12.0 


10.8 


10.5 


11.4 




9.1 


9.5 


9.6 


9.3 


9.7 


10.9 






n.a. 


n.a. 


3.9 


4.5 


5.3 


United States 


3.2 


4.0 


8.2 


6.3 


5.4 


5.2 




4.9 


3.3 


4.5 


4.2 


4.5 


4.7 




2.6 


3.6 


4.1 


4.0 


4.0 


3.9 




3.1 


4.0 


3.5 


3.3 


3.5 


3.6 


mports 














EC » 


33.5 


33.6 


35.6 


38.7 


43.1 


44.4 




1 7 Q 


1 7 ^ 


1 7 Q 


17 9 


1Q 1 


lo.D 




13.3 


13.1 


13.9 


14.9 


17.0 


17.4 


28.0 


28.5 


26.2 


24.1 


18.2 


17.0 




24.6 


25.7 


23.1 


21.0 


15.3 


14.4 




12.2 


11.2 


12.3 


11.8 


13.6 


12.9 




7.3 


6.6 


7.7 


7.2 


6.5 


7.1 






n.a. 


n.a. 


5.3 


6.5 


7.1 






n.a. 


5.0 


5.4 


4.8 


5.2 






n.a. 


n.a. 


3.4 


4.5 


4.3 




2.6 


2.7 


2.7 


2.9 


3.1 


3.1 




2.3 


1.7 


2.4 


2.5 


2.8 


2.8 




2.1 


2.6 


2.1 


2.4 


2.2 


2.2 



n.a. — Not available. 

' EC — European Community (see Glossary). 

^ EFTA — European Free Trade Association (see Glossary). 

' Comecon — Council for Mutual Economic Assistance (see Glossary). 



Source: Based on information from Economist Intelligence Unit, Country Profile: Finland, 
1988-89, London, 1988, 27-8. 



363 



Finland: A Country Study 



00 

-H o 



00 CM 
00 
00^ (£>_ 

ci cm" 



CM 
CD 



00 in 



■ u 
- . < 

M n5 H 





CM 






e<^ 


00 




in 


00 


O 


CO 


CM 


vo 


1-^ 




in 




CO 


CM 


o 


CM 




•>*" 




CM 




00 




o 


in 


CO 




CM 


CO 


CM 




o 








in 




CM 


CO 


00 






^ 


CM 


T 






CO 


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CM 


1 


1 










1 








CM 








































1 






in 






CM 












in 


CM 


CO 


CO 


o 


CO 




CM 


CO 


r-. 






in 








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(£> 


eo 


O) 


in 


(£) 


00 


CM 


CM 


CO 






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CO 


CM 


00 


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^ o 

CO 00 
<0 CM 



C/3 

o 
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Q 

< 

Q 
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z 
o 

(73 PQ 



CM CM 

CM in r-* 



CO O 

^ 0^ 



O CM- 
CM o 



in 
I I 



CM CM 
CM ^ 



in r>. CM m 

CO in 
I I I (O 



u 
z 

^ « .2 J w 
"-^ > ,S < CtJ 
c c S H 
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in CO 

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00 — O <£> 

t-* -H m 



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c £ O o 



"i" 

CO ■<*• in CM CO 
(£) CO I in 



00 CO 
in CM in 

I CM 



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CO in 

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Tf> CO 



CM CO 

in CTi 

CM CO 



00 in 
O in 

CM 



in 00 

o 

CM CM I 

I 



00 O) 

Oi 

LD — — 



in 

CO CO 

in o 



'u 

^ 1 



"(3 . 5 



^i5 

PC* 
^ 03 C/5 



> 



. - . o < ^ 

J Z Oh W O 



C/3 



364 



Appendix A 



^ ^ o 

I CD 



O 

•rt CO 



^ 00 CO 
»-< CM 



e - 
5 • ^ 

S S Q S 

r 3 O H 

- §.2 



•n 



si 
i 

■§ 1 

o o 



BP 

o 

p 



el 



II 



J3 3 fa 



it 

«J ^ « 

09 (4 if 

ill 

« « 3j 

S I " 
•ait; oj 

« 00 U o 

« .o <o C/3 



365 



Finland: A Country Study 

Table 21. Daily Newspapers with Largest Circulations, 1986 

Frequency of 





riace oi 


Appearance 


Party 




Newspaper 


Publication 


per week 


Affiliation * 


Circulation 


Helsmgin Sanomat 


rlelsmki 


7 


none 


A QA OKI 


Ilta-Sanomat 


Helsinki 





none 


iyj,y / 1 


Aamulehti 


Tampere 


/ 




140,918 


Xurun Sanomat 


Turku 


7 


none 




Nlaaseudun Tulevaisuus 


Helsinki 


o 
3 


none 




Uusi Suomi 


rieismKi 


7 


none 


no CQC 


K.aleva 


vJUlU 


7 


none 


QQ 177 


Savon Sanomat 


Kuopio 


7 


JvesK 


QK 1 <t7 
oD,lD/ 


iiiaicnii 


Helsinki 


a 
o 


none 


7ft Q4.Q 


K.eskisuomalainen 


Jyvaskyla 


7 


j\.esK 


7f: 9Q^ 


Kotimaa 


rleisinKi 


q 

J 


none 


7<i A<;a 


Kauppalehti 


rlelsmki 


D 


none 


70 QQQ 


Etela-Suomen Sanomat 


Lianti 


7 


none 


00, 1*0 


Hufvudstadsbladet 


rieisinKi 


7 


none 


00,Uol7 


Pohjalainen 


Vaasa 


7 

7 


K(JK. 


o4-,00o 


Satakunnan K.ansa 


Pori 


7 




An Qn7 


iiKKa 


Seinajoki 


7 






Karjalainen 


Joensuu 


7 


KOK 


53,364 


Kansan Uutiset 


Helsinki 


6 


SKDL 


41,504 


Lapin Kansa 


Rovaniemi 


7 


none 


40,407 


Pohjolan Sanomat 


Kemi 


7 


Kesk 


39,149 


£tela-Saim£ia 


Lappeenranta 


7 


Kesk 


34,304 


Suomen Sosialidemokraatti 


Helsinki 


5 


SDP 


34,099 


Keskipohjanmaa 


Kokkola 


7 


Kesk 


33,064 


Suomenmaa 


Helsinki 


5 


Kesk 


32,802 



• For full names of political parties, see Table 4. 

Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook 
of Finland, 1987, Helsinki, 1987, 410. 



366 



Appendix A 

Table 22. Major Army Equipment, 1988 



Estimated 

Number in Country of 

Type Inventory Manufacture 



Armored vehicles 

T-54/T-55 main battle tank 

T-72 main battle tank 

PT-76 light reconnaissance tank 

BMP-1 infantry combat vehicle 

BTR-50P armored personnel carrier, 

tracked 

BTR-60P armored personnel carrier, 

8 wheeled 

A- 180 Pasi armored personnel carrier, 

6 wheeled 

Towed artillery 

M-37, M-61 105mm howitzer 

M-38, D-30 122mm howitzer 

M-54 130mm field gun 

M-40 150mm howitzer 

M-38 152mm howitzer 

M-74 155mm howitzer 

Coast artillery 

D-IOT tank turrets, 100mm 

M-60 122mm gun 

130mm turret gun 

152mm turret gun 

Surface-to-surface missiles (coastal defense) 
RES- 15 

Mortars 

M-56, M-64, M-71 81mm 

M-43 120mm 

Antitank wire-guided missiles 

AT-4 (SPIGOT) 

I-TOW (tube-launched, optically 

tracked, wire-guided) 

Recoilless rifles 

M-55 55mm 

SM 58-61 95mm 

Air defense guns 

ZU-23 23mm 

Oerlikon GDF-002 35mm 

Bofors L-60/Bofors L-70 40mm 

S-60 57mm towed 

ZSU 57-2 self-propelled 

Surface-to-air missiles 

SA-3 GOA 

SA-7/SA-14 shoulder-fired 



100 


Soviet Union 


50 


-do- 


15 


-do- 


30 


-do- 


90 


-do- 


60 


-do- 


59 


Finland 


70 + 


-do- 


n.a. 


Soviet Union 


170 


-do- 


n.a. 


Germany (World War II) 


240 


Soviet Union 


1 


-do- 


n.a. 


-do- 


n.a. 


Finland 


1 /u 


— ao— 


240 


-do- 


n.a. 


Sweden 


800 


Finland 


550 


Soviet Union and Finland 


24 


Soviet Union 


12 


United States 


n.a. 


Soviet Union 


100 


Finland 


n.a. 


Soviet Union 


n.a. 


Switzerland 


100 + 


Sweden 


12 


Soviet Union 


12 


-do- 


n.a. 


-do- 


n.a. 


-do- 



n.a. — Not available. 

Source: Based on information from The Military Balance, 1988-89, London, 1988, 88; and 
Tomas Ries, Cold Will: The Defence of Finland, London, 1988, 215-6. 



367 



Finland: A Country Study 



Table 23. Major Naval Equipment, 1988 



Type 



Number Date Commissioned 



Corvettes 

Turunmaa class, 660 tons, 120mm gun, 1968, modernized 

antisubmarine rocket launchers 2 1984-86 

Missile craft 

Helsinki class fast attack, 300 tons, eight 

RBS-15 SF missUes 4 1981-86 

Helsinki-2 class, 200 tons 4 projected 1990-92 

Tuima class 210 tons (Soviet OSA-II), 

four SS-N-2A Styx missiles 4 purchased 1974-75 

Isku (experimental), four SS-N-2A 

Styx missiles 1 1970 

Fast attack craft (gun) 

NuoH class, 40 ton 6 1961-66, moder- 
nized 1979 

Ruissalo class, 130 ton, antisubmarine 1959, modernized 

minelaying 3 1977-80 

Rihtniemi class, 110 ton, antisubmarine 1957, modernized 

minelaying 2 1981 

Minelayers 

Pohjanmaa, 1100 ton 1 1981 

Keihassalmi, 360 ton 1 1957 

Minesweepers 

Kuha class, inshore 6 1974-75 

Kiiski class 7 1984 

Landing craft, utility 

Kampela class, 90 ton 3 1976-79 

Kala class, 60 ton 6 1956-59 

Kave class, 27 ton 5 1956-60 

Coast Guard 

Large offshore patrol craft, 700 ton 2 1986-87 

Large patrol craft 5 1963-87 

Coastal patrol craft 24 15 in 1981-86, 

others earlier 

* All ships constructed in Finlaind except Tuima class missile craft, which were built in the Soviet Union. 
Source: Based on information from Jane's Fighting Ships, 1988-89, London, 1988, 155-62. 



368 



Appendix A 



Table 24. Major Air Force Equipment, 1988 

Country First 
Type Number Manufacture Acquired 



Fighters-interceptors * 

MiG-21bis 

SAAB J-35 Draken 

Training 

MiG-21 U/UM 

SK-35C Draken 

Hawk MK-51 

L-70 Vinka 

Reconnaissance 

Hawk MK-51 

Transport 

F-27 Fokker, nmedium 

Mi-8 helicopter 

Hughes 500 helicopter 

Liaison 

CM- 170 Magister 

Piper (Cherokee Arrow and Chieftain) 



30 Soviet Union 1978 

41 Sweden 1974 

4 Soviet Union 1974 

4 Sweden 1972 
39 Britain 1980 
30 Finland 1979 

8 Britain 1980 

3 Netherlands 1980 

6 Soviet Union 1973 

2 United States 1975 

5 France 1964 
14 United States n.a. 



* Some in conversion and training status. 

Source: Tomas Ries, Cold Will: The Defence of Finland, London, 1988, 217-8, and The Mili- 
tary Balance, 1988-89, London, 1988, 88. 



369 



Appendix B 



TREATY 

of Friendship, Cooperation, and Mutual Assistance between the Republic of 
Finland and the Union of Soviet Socialist Republics. 

The President of the Republic of Finland and the Presidium of the Supreme Soviet 
of the U.S.S.R.; 

Desiring further to develop friendly relations between the Republic of Finland and 
the U.S.S.R.; 

Being convinced that the strengthening of good neighbourly relations and 
co-operation between the Republic of Finland and the U.S.S.R. lies in the interest 
of both countries; 

Considering Finland's desire to remain outside the conflicting interests of the Great 
Powers; and 

Expressing their firm endeavour to collaborate towards the maintenance of inter- 
national peace and security in accordance with the aims and principles of the United 
Nations Organization; 

Have for this purpose agreed to conclude the present Treaty and have appointed 
as their Plenipotentiaries: 

The President of the Republic of Finland: Mauno Pekkala, Prime Minister of the 
Republic of Finland; 

The Presidium of the Supreme Soviet of the U.S.S.R.: Viacheslav Mihailovich 
Molotov, Vice-Chairman of the Council of Ministers of the U.S.S.R. and Minister 
for Foreign Affairs, 

who, after exchange of their full powers, found in good and due form, have agreed 
on the following provisions: 

ARTICLE 1 

In the eventuality of Finland, or the Soviet Union through Finnish territory, 
becoming the object of an armed attack by Germany or any State allied with the latter, 
Finland will, true to its obligations as an independent State, fight to repel the attack. 
Finland will in such cases use all its available forces for defending its territorial integrity 
by land, sea and air, and will do so within the frontiers of Finlzmd in accordance with 
obligations defined in the present Treaty and, if necessary, with the assistance of, 
or jointly with, the Soviet Union. 

In the cases aforementioned the Soviet Union will give Finland the help required, 
the giving of which will be subject to mutual agreement between the Contracting Parties. 

ARTICLE 2 

The High Contracting Parties shall confer with each other if it is established that 
the threat of an armed attack in Article 1 is present. 

ARTICLE 3 

The High Contracting Parties give assurance of their intention loyally to partici- 
pate in all measures towards the maintenance of international peace and security in 
conformity with the aims and principles of the United Nations Organization. 



371 



Finland: A Country Study 



ARTICLE 4 

The High Contracting Parties confirm their pledge, given under Article 3 of the 
Peace Treaty signed in Paris on February 10th, 1947, not to conclude any alliance 
or join any coalition directed against the other High Contracting Party. 



ARTICLE 5 

The High Contracting Parties give assurance of the decision to act in a spirit of 
co-operation and friendship towards the further development and consolidation of eco- 
nomic and cultural relations between Finland and the Soviet Union. 



ARTICLE 6 



The High Contracting Parties pledge themselves to observe the principle of the 
mutual respect of sovereignty and integrity and that of non-interference in the inter- 
nal affairs of the other State. 



ARTICLE 7 

The execution of the present Treaty shall take place in accordance with the princi- 
ples of the United Nations Organization. 



ARTICLE 8 

The present Treaty shall be ratified and remains in force ten years after the date 
of its coming into force. The Treaty shall come into force upon the exchange of the 
instruments of ratification, the exchange taking place in the shortest time possible 
in Helsinki. 

Provided neither of the High Contracting Parties has denounced it one year before 
the expiration of the said ten-year period, the Treaty shall remain in force for subse- 
quent five-year periods until either High Contracting Party one year before the expira- 
tion of such five-year periods in writing notifies its intention of terminating the validity 
of the Treaty. 

In witness hereof the Plenipotentiaries have signed the present Treaty and affixed 
their seals. 

Done in the City of Moscow on the sixth day of April 1948 in two copies, in the 
Finnish and the Russian languages, both texts being authentic. 



The Plenipotentiary of the 
President of the Republic of 
Finland: 
Mauno Pekkala. 



The Plenipotentiary of the 
Presidium of the Supreme 
Soviet of the U.S.S.R.: 
V. Molotov. 



372 



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Finland: A Country Study 

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Uotila, Jaakko (ed.). The Finnish Legal System. (2d. ed.) Helsinki: 
Finnish Lawyers Publishing, 1985. 

Vayrynen, Raimo. "The Neutrality of Finland." Pages 132-65 
in Karl E. Birnbaum and Hanspeter Neuhold (eds.), Neutrality 
and Non-Alignment in Europe. Vienna: Wilhelm Braumiiller, 1982. 

. "Die finnische Verteidigungspolitik und ihre militarische 

Infrastruktur." Pages 141-66 in Dieter S. Lutz and Annemarie 
Grosse-Jiitte (eds.), Neutralitdt — Fine Alternative? Baden-Baden, 
West Germany: Nomos, 1982. 

Vesa, Unto. "Finland: No Enemies." Pages 233-46 in Robert 
Rudney and Luc Reychler (eds.), European Security Beyond the Year 
2000. New York: Praeger, 1988. 

Wiener, Friedrich. Die Armeen der neutralen und blockfreien Staaten Eu- 
ropas. Vienna: Carl Ueberreuter, 1986. 



420 



Glossary 



Council for Mutual Economic Assistance (CMEA, CEMA, or 
Comecon) — Members in 1988 included Bulgaria, Cuba, 
Czechoslovakia, the German Democratic Republic (East Ger- 
many), Hungary, Mongolia, Poland, Romania, the Soviet 
Union, and Vietnam. Its purpose is to further economic cooper- 
ation among members. 

Council of Europe — Founded in 1949 to foster parliamentary 
democracy, social and economic progress, and unity among 
its member states. Membership is limited to those European 
countries that respect the rule of law and the fundamental 
human rights and freedoms of all those living within their 
boundaries. As of 1988, its membership consisted of twenty- 
one West European countries. 

European Community (EC — also commonly called the Commu- 
nity) — The EC comprises three communities: the European 
Coal and Steel Community (ECSC), the European Economic 
Community (EEC, also known as the Common Market), and 
the European Atomic Energy Community (Euratom). Each 
community is a legally distinct body, but since 1967 adl the 
members have shared common governing institutions. The EC 
forms more than a framework for free trade and economic 
cooperation: the signatories to the treaties governing the com- 
munities have agreed in principle to integrate their economies 
and ultimately to form a political union. Belgium, France, Italy, 
Luxembourg, the Netherlands, and the Federail Republic of 
Germany (West Germany) are charter members of the EC. 
Britain, Denmark, and Ireland joined on January 1, 1973; 
Greece became a member on January 1, 1981; and Portugal 
and Spain entered on January 1, 1986. 

European Economic Community — See European Community. 

European Free Trade Association (EFTA) — Founded in 1961, 
EFTA aims at supporting free trade among its members and 
increasing the liberalization of trade on a global basis, but par- 
ticularly within Western Europe. In 1988 the organization's 
member states were Austria, Finland, Iceland, Norway, 
Sweden, and Switzerland. 

Finnish mark (Fmk) — Also called Finnmark. Consists of 100 pen- 
nid (singular: penni). In terms of the United States dollar, the 
average annual exchange rate was Fmk3.22 in 1965, Fmk3.86 



421 



Finland: A Country Study 



in 1975, Fmk3.85 in 1980, Fmk5.30 in 1982, Fmk6.54 in 1984, 
Fmk5.42 in 1985, Fmk4.79 in 1986, Fmk3.95 in 1987, and 
Fmk4.17 in 1988. 
General Agreement on Tariffs and Trade (GATT) — An interna- 
tionzil organization established in 1948 and headquartered in 
Geneva that serves as a forum for international trade negotia- 
tions. GATT members pledge to further multilateral! trade by 
reducing import tariffs, quotas, and preferential trade agree- 
ments, and they promise to extend to each other any favora- 
ble trading terms offered in subsequent agreements with third 
parties. 

gross domestic product (GDP) — The totad vailue of goods and ser- 
vices produced by the domestic economy during a given period, 
usually one year. Obtained by adding the value contributed 
by each sector of the economy in the form of profits, compen- 
sation to employees, and depreciation (consumption of capi- 
tal). Most GDP usage in this book was based on GDP at factor 
cost. Real GDP is the value of GDP when inflation has been 
taken into account. 

gross national product (GNP) — Obtained by adding GDP {q. v. ) 
and the income received from abroad by residents, less pay- 
ments remitted abroad to nonresidents. GNP valued at mar- 
ket prices was used in this book. Real GNP is the value of GNP 
when inflation has been taken into account. 

International Monetary Fund (IMF) — Established along with the 
World Bank {q.v.) in 1945, the IMF is a specialized agency, 
affiliated with the United Nations, that takes responsibility for 
stabilizing international exchange rates and payments. The 
main business of the IMF is the provision of loans to its mem- 
bers when they experience balance-of-payment difficulties. 
These loans often carry conditions that require substantial in- 
ternal economic adjustments by the recipients. 

Organisation for Economic Co-operation and Development 
(OECD) — Established in 1961 to replace the Organisation for 
European Economic Co-operation, the OECD is an interna- 
tional organization composed of the industrialized market econ- 
omy countries (twenty-four full members as of 1988). It seeks 
to promote economic and socicil welfare in member countries 
as weU as in developing countries by providing a forum in which 
to formulate and to coordinate policies. 

World Bank — Informal name used to designate a group of three 
affiliated international institutions: the International Bank for 
Reconstruction and Development (IBRD), the International 
Development Association (IDA), and the International Finance 



422 



Glossary 



Corporation (IFC). The IBRD, established in 1945, has the 
primary purpose of providing loans to developing countries for 
productive projects. THe IDA, a legEdly separate lo2in fund ad- 
ministered by staff of the IBRD, was set up in 1960 to furnish 
credits to the poorest developing counties on much easier terms 
than those of conventional IBRD loans. The IFC, founded in 
1956, supplements the activities of the IBRD through loans 
and assistance designed specifically to encourage the growth 
of productive private enterprises in less developed countries. 
The president and certain senior officers of the IBRD hold the 
same positions in the IFC. The three institutions are owned 
by the governments of the countries that subscribe their capi- 
tal. To participate in the World Bank group, member states 
must first belong to the IMF (q.v.). 



423 



Index 



Aalto, Arvo, 257, 258 
Abo Academy, 12 

Academic Karelia Society (Akateeminen 

Karjala-Seura: AKS), 36, 50 
Act of Political Parties (1969), 248 
Act of Union and Security (1789), 220 
Act on Civil Service Collective Agree- 
ments (1970), 238-39 
administration, provincial and local, 
240-43 

Administrative Council, 272-73 
adult education. See education 
Advisory Commission on Gypsy Affairs, 
102 

Advisory Commission on Lapp Affairs, 
95 

Afghanistan, 286, 327 

The Agrarian Party (Maalaisliitto: ML) 
{see also Center Party (Keskustapuoiue: 
Kesk)), xxvi, xxvii, xxx, 34, 60, 249, 
252, 258; Kekkonen role in, 62; 
representation in Eduskunta of, 58 

Agricola, Mikael, 11-12 

Agricultural Development Fund, 166 

agricultural seaor {see also farms/farmers), 
xvii, XXV, xxviii, 15, 85, 160; central- 
ized associations for, 150, 261; in 
coastal Finland, 76; education for, 166; 
farm cooperatives in, 164; government 
intervention in, 151; increased produc- 
tivity of, 22, 162-63, 165; in interwar 
years, 37-38; labor force decline for, 
73, 85, 88, 163; land ceded to Soviet 
Union, 162; in medieval Finland, 7,9; 
modernization of, 141, 143-44, 161, 
162; nature of, 160-61; policy for, 
164-68; production patterns for, 167, 
169; productivity of, 147; subsidies and 
protection for, 144, 147, 162, 164, 166, 
207, 209; surpluses in, 164-65; unions 
in, 164 

air control network, civilian and military, 
313 

aircraft: F-27 Fokkers, 313; Hawk 
Mk-51s, 312-13; interceptor, 302; 
JAS-39 Gripen, 329; Jet Ranger and 
Super Puma helicopters, 337; MiG-29, 
329; MiG-21bis, 312, 315, 328-29; 



MiG-21F, 328-29; Mi-8 helicopters, 
313; Saab J-35 Draken, 312, 313, 315, 
328-29; Valmet L-70 Vinka trainer, 
313, 329 

Air Force Academy, 313, 318-19 

air force (Ilmavoimat), 296, 303, 307, 
309; air defense regions of, 313; air 
squadrons of, 312-13; antiaircraft de- 
fenses of, 309; flight training for, 313- 
14; headquarters of, 308, 313; intercep- 
tor and reconnaissance capabilities, 
312-13; peacetime mission of, 312; 
radar system of, 313 

air freight services, 195, 198 

airlines, 198, 213 

Air Patrol Command, 337 

airport, xviii, 198 

air surveillance system, 330 

air transport, 198 

AKS. See Academic Karelia Society (Aka- 
teeminen Karjala-Seura: AKS) 

Aland Delegation, 245 

Aland Islands: in archipelago Finland, 
75-76, 84; autonomy for, 221, 223, 
240; ceded to Soviet Union, 45; de- 
mands of Soviets for, 47; demilitariza- 
tion and defense of, 297-98, 300, 304, 
310; issue of security concerning, 39; 
Landstingof, 245; Provincial Executive 
Council of, 245; settiements of Swedish 
speakers, 96 

alcoholic beverages industry, 151 

alcohohsm, 128-29 

Alestalo, Matti, 88-89 

Alexander I (tsar), xxiii-xxiv, 16, 220 

Alexander II (tsar), xxiv, 220 

Alexander of Novgorod (prince), 7 

AUardt, Erik, 119 

Allied Control Commission, 50, 54, 296 
all-terrain vehicles: KB-45, 329; SA-150 

Masi, 329; NA-140 Nasu, 329; NA- 

140, 308 
ammunition, 327-28 
Anjala League, 15 
antiaircraft defenses, 309 
antiaircraft school, 319 
antitank weapons, 310 
apatite, 176 



425 



Finland: A Country Study 



appliance manufacture, 188 
April Theses, 29 
arable land, 160 

Arava legislation. See housing; Housing 
Production Act (1953) 

archipelago Finland, 75, 79 

Arctic Circle, 73, 74, 76, 169 

Arctic Ocean, 35, 39, 79, 313 

armaments industry, 328-30 

armed forces {see also Defense Forces); 
components of, xix; establishment of, 
41; MilitEiry Academy for, 318; restric- 
tion in size of, 50, 52; restriction of 
Treaty of Paris for, 296 

Armfelt, Gustaf Mauritz, 16 

army (Maavoimat), 296, 308-10; anti- 
aircraft defenses of, 309; brigade for 
Swedish speakers, 99; career officer 
candidates, 318; ground forces of, 302, 
308; incorporation into Russian army 
of, 24; infantry battalion and support 
units, 308, 310; offensive in Continua- 
tion War of, 48-49; role in Winter War 
of, 44-47, 295 

Army Strike, 24 

art academies, 115 

artillery school, 319 

assimilation, 73, 96, 102 

Atlantic Alliance, see North Atlantic 
Treaty Organization (NATO) 

Atlantic Ocean, 79 

Australia, 175 

Austria, 210 

automobiles, 197 

Autonomy Act of 1951, 221; of 1975, 243 
The Awakened (revivalist movement), 
107, 108 



Bahai Society, 112 

bakery equipment manufacture, 190 

balance of payments {see also trade perfor- 
mance), xvii, 38, 146, 156, 206-7 

Balkan countries, 49 

Baltic countries, 40, 42, 298; annexation 
by Soviet Union of, 42, 47 

Baltic Sea, xxiu, 4, 12, 75, 277, 298, 299, 
300; area of, 12, 13; as training ground 
for German navy, 49 

Bank of Finland (BOF), 21, 152, 154, 
192, 206, 211, 225 

banking system, 147, 150, 191-95; farm 
cooperatives in, 164 



banks: commercial, 192-93; cooperative, 
192; foreign-owned, 194; national, 193; 
savings, 192-93, 263; state-owned, 
192-93 

Barents Sea, 277, 300 

battalions, 293, 310; artillery, 309; de- 
fending coastline, 309 

Battle of Suomussalmi (1939), 44 

Bible, 11, 104 

bilingualism, 100-101 

birth rate, 79, 80, 81 

Bishops' Conference (Lutheran Church), 
109 

Bobrikov, Nikolai Ivanovich, 23, 25 
BOF. See Bank of Finland (BOF) 
Bolshevik Revolution (1917), xxvii, 26- 

27, 29, 40, 143, 220, 248 
Borga diocese, 108 
boundaries, 74-75 

boundary dispute {see also Treaty of 
Dorpat, or Tartu (1920)); Soviet 
Union-Finland, 39-40 

Brigade 80 forces. See jaeger (ranger) 
brigades 

Brigade 90 forces. See jaeger (ranger) 
brigades 

brigades {see also jaeger (ranger) brigades), 

296, 308, 310 
budget, government, 154-55, 227 
Bulgaria, 296 
burghers, 87 

cabinet. See Council of State 
cadmium deposits, 177 
canals, 197 

capitid: formation of, 181; imports and 

exports of, 205 
Caps political party, 13 
Castle Peace Agreement (1951), 58 
cellulose industry, 21, 38 
CEMA. 51^^ Council for Mutual Economic 

Assistance (CMEA, CEMA, or Come- 

con) 

cement industry, 21 
censorship, 274 

Center Party (Keskustapuolue: Kesk), 
XXX, xxxi, 62, 64, 65, 66, 67, 218, 239, 
246; development and role of, 252-53; 
in government coalition, 264, 266; 
news agency of, 271; representation in 
Eduskunta of, 267 

central bank. See Bank of Finland (BOF) 



426 



Index 



Central Criminal Police (Keskusrikos- 

poliisi: KRP), xx, 332, 333, 335 
Central Organization of Finnish Trade 
Unions (Suomen Ammattiliittojen 
Keskusjarjesto: SAK), 65, 261 
Central Organization of Professional Asso- 
ciations in Finland (Akava), 261 
Central Pension Security Institute, 122 
Central Statistical Office of Finland, 86 
Chambers of Police, 332-33 
chancellor of justice, xix, 232-33, 235-36 
Charismatics (revivalist movement), 108 
Charles XII (king of Sweden), 13 
chemical industry, 151, 179, 190, 201; 

overseas expansion of, 205 
Chernobyl Nuclear Power Plant, 133, 

176, 332 
Child Allowance Act (1948), 125 
child allowances, 125 
child care services, 125, 126 
Child Day Care Act (1973), 126 
Child Welfare Act (1983), 126 
Christian Scientists, 103 
Christianity: conversion of Finns to, xxiii, 
5 

chromite deposits, 177 

Church Assembly (Orthodox Church of 
Finland), 111-12 

Church of Jesus Christ of Latter Day 
Saints. See Mormons 

circuit courts. See court system 

civil defense, 330-32; early warning sys- 
tem, 330; evacuation program for, 332; 
shelter system of, 331-32 

Civil Defense Act (1958), 330 

Civil Guard, 25, 26, 27, 36, 37, 50, 295, 
296 

civil service, 238-39, 261 

Civil War (1918), xxvii, 3-4, 294-95; 

Defense Forces political role in, 325; 

impact of, 32-33, 35, 87, 118-19, 143, 

217; prelude and outbreak of, 26-30; 

Reds and Whites in, 3-4, 26, 294 
class structure. See social structure 
clergy, 87 

climate (^^^a/jo winter), xvi, 79, 160, 169, 
173, 195, 301; in defense strategy, 304 

CMEA. See Council for Mutual Economic 
Assistance, (CMEA, CEMA, or 
Comecon) 

coal imports, 174, 175 

coalitions, political, 58, 64, 65-66; Red- 
Earth, 58, 64, 249, 252, 254, 258 



coast artillery school, 319 

Coast Guard, xx, 310, 312, 336, 337-38 

Coast Guard School, 337 

coastal waters, 160, 172 

coastline, 75, 76, 178, 301-302 

cobalt deposits, 176, 177 

Cold War, 53-57, 210, 280, 282, 286 

Colombia, 175 

combat school, 319 

combine manufacture, 186 

Comecon. See Council for MutUcJ Eco- 
nomic Assistance (CMEA, CEMA, or 
Comecon) 

communication equipment manufacture, 
188 

communications, 147, 195 

communism, xxx, 4, 32, 34, 36-37, 62; 
decline of, 67; sympathy for, 54-55 

communist-front organization, 48 

Communist Party of Finland (Suomen 
Kommunistinen Puolue: SKP), xxx, 
34, 218, 249; development and activ- 
ity of, 255-58; legalization of, 50, 54, 
254; representation in Eduskunta of, 
256; revisionists and Stalinists in, 257; 
Soviet Union intervention in, 282 

Communist Party of the Soviet Union 
(CPSU), 257 

Compliants, 24, 53 

Comprehensive Education Act (1921), 
112 

computer manufacture, 188 
Confederation of Agricultural Producers 

(Maataloustuottajain Keskusliitto: 

MTK), 164, 165, 261 
Confederation of Commerce Employers 

(Liiketyonantajain Keskusliitto: LTK), 

261 

Confederation of Finnish Employers 
(Suomen Tyonantajain Keskusliitto: 
STK), 58, 64, 158, 159, 261 

Confederation of Finnish Trade Unions 
(Suomen Ammattiyhdistysten Keskus- 
liitto: SAK), 34, 58, 64, 158, 159, 249; 
alliance with SDP of, 261 

Confederation of Salaried Employees and 
Civil Servants (Toimihenkilo- ja 
Virkamiesjarjestojen Keskusliitto: 
TVK), 261 

Confederation of Technical Employees' 
Organizations in Finland (Suomen 
Teknisten Toimihenkilojarjestojen 
Keskusliitto: STTK), 261 



427 



Finland: A Country Study 



Conference on Security and Cooperation 
in Europe: CSCE (1975), xxx, 68, 219, 
278 

conscription law (1901), 24, 25, 293, 294 

conscription system {see also conscription 
law (1901), xix, 291, 295, 315, 324-25; 
of Finns in Russian army, 23, 24 

Constitution (1919), xxvii, 33, 116; 
amendment to, 221-22; basic laws of, 
221, 222-23; protection of Swedish 
speakers in, 97; religious freedom 
gu£irantee in, 103 

Constitution Act (1919), xviii, 219, 220, 
221, 231, 235, 236, 238, 240, 258; 
Article 10 of, 273; individual rights 
under, 222 

Constitutionalists, 24 

Constitutional Party of the Right (Per- 
ustuslaillinen Oikeistopuolue: POP), 
68, 255, 259 

construction sector, 85, 190 

Continuation War (1941-44), xxviii, 
47-50, 53, 162, 252-53, 256; goals of, 
295-96; Kekkonen position on, 58; les- 
sons of, 292; preliminary peace treaty 
of, 279 

control system manufacture, 188 

cooperatives. See farm cooperatives 

copper deposits, 20, 176, 186 

Council for Equality, 92 

Council for Mass Media Qulkisen Sanan 
Neuvosto: JSN), 274 

Council for Mutual Economic Assistance 
(CMEA, CEMA, or Comecon), xxix, 
63, 207, 212, 281, 284 

Council of Europe, xix, xxix, 285 

Council of State, xxvii, 217, 221, 229, 
236; Economic Policy Committee of, 
234; executive power and responsibil- 
ity of, 232-34; Finance Committee of, 
234; Foreign Affairs Committee of, 
234; relations with Eduskunta of, 233; 
relation to Aland Islands, 245-46 

court system, xix, 236-37; administrative, 
xix, 237-38; courts of appeals in, 235, 
236-37; criminal courts in, 340-41; di- 
vision of, 235, 236-37; special military 
court of, 341 

CPSU. See Commimist Pairty of the Soviet 
Union (CPSU) 

crane manufacture, 186 

crime, 342-44 

Crimean War (1853-56), 20 



criminal justice system, 338-44 
Crowe, WiUiam, 285 
crusades, 5, 7 

currency, xxv; appreciation of, 154; 

devaluations for, 153, 158, 209; ruble 

clearing account, 211 
Customs Office, 337 
Cyprus, 327 
Czechoslovakia, 55 



dairy equipment manufacture, 190 
dairy farming, 38, 76 
Danish Straits, 300 

debt: domestic, 155-56; external, 145, 

156, 206-7 
defense commission, 305 
defense committees, parliamentary, 305, 

324 

Defense Council, 41, 43, 304, 325 

Defense Forces, xix, 292; Aland Islands 
defense by, 298; authority over, 305; 
commander-in-chief of, 307; conditions 
of service for, 322-23; conscription for, 
315; general, local, and support forces 
of, 303, 304, 309-10; reorganization of, 
296; role in society of, 324-26; special 
courts for personnel of, 341; training 
for, 318-19; uniforms of, 319, 322 

Defense Forces' NCO School, 337 

defense policy {see also mobilization), 
291-92, 300-301, 303 

Defense Review Committee (1926), 41 

defense spending {see also spending, gov- 
ernment), 323-24 

defense strategy, 302-4 

Democratic Alternative (Demokraattinen 
Vaihtoehto: DEVA), 257-58, 267 

demography, 79-81, 83-84 

Demokraattinen Lehtipalvelu (DPL), 271 

Denmark, 13, 60, 276, 277, 298, 344; 
Finnish investment in, 205; in Great 
Northern War, 13; interest in Baltic 
area of, 12; position on neutrality of, 
61; Scandinavian union under, 9-10; 
struggle for power by, 10; treaty with 
Muscovy by, 10 

deregulation, 152 

Deriabin, lurii, 281 

DEVA. See Democratic Alternative 
(Demokraattinen Vaihtoehto: DEVA) 
Diet Act of 1617 (Sweden), 219 
Diet of the Four Estates (Riksdag), xxiv. 



428 



Index 



xxvi, 9, 10, 25, 258; Finnish represen- 
tation in, xxiii, 9, 219-20 

disarmament measures, 304 

disease, 131-32 

district heating, 176 

divorce, 91 

draft. See conscription law 
Dragoon regiment, 293 
drainage systems, 161, 162 
Draken. See Saab J-35 Draken 
drought, 160 

drug use, 128-29, 131, 344 
drumlins, 75, 76 

dual kingdom, Finland and Sweden, xxiii, 

10-16, 219, 293 
Duma, 25 



Eastern Europe. See Europe, Eastern 
Eastern Orthodoxy, 4, 35 

EC. See European Community (EC) 
Ecclesiastical Board (Lutheran Church), 

109 

Ecclesiastical Law (1687), 12; (1869), 105 

economic cooperation: with Eastern Eu- 
rope, 199-204, 210-213; with Nordic 
Europe, 208, 283-84; with Western 
Europe, 207-10, 284-85 

economic development: government in- 
tervention in, 150-52; impact of, 4, 
62-63, 84-85, 86, 91, 147; post-World 
War II, 83, 141, 147, 150 

economic performance, xviii, 37-38, 63, 
143-47, 154 

economic policy, 145-47; for trade, 150- 
52 

economy, medieval, 7, 9 
Ecumenical Patriarchate of Constanti- 
nople, 111 

ED. See National Progressive Party (Kan- 
sallinen Edistyspuolue: ED) 

education system {see also Comprehensive 
Education Act (1921)), xvi-xvii, xxxii, 
112-18; for adults, 118; for agricultural 
sector, 166; as factor in social mobili- 
ty, 85-87; focus on equality of, 113; 
goals of, 112-13; higher, 116, 118; for 
medical personnel, 120; primary and 
secondary, 113-16; for women, 91 

Eduskunta {see also Council of State); can- 
didates for, 243-44; Constitutional 
Committee of, 221, 236; importance of, 
xviii, xxvii, 217; Kesk representation 



in, 65; KOK representation in, xxx, 65, 
66; legislative procedure of, 225-28; 
means of control by, 228-29; people 
govern through, 221; powers of, 223, 
225; relation with Aland Islands of, 
246; replaces Diet, xxvi, 25, 220; 
representatives of, 326; role in budget 
process of, 154-55; role in nation£il 
defense of, 305; SDP representation in, 
26, 58; SEP representation in, xxx, 99; 
SKDL representation in, 54-55, 56, 58, 
60, 62; SMP representation in, xxxi, 
62, 65 

EEC. See European Economic Commu- 
nity (EEC) 

EFTA. See European Free Trade Associ- 
ation (EFTA) 

Egypt, 327 

election laws, 225 

electoral system {see also suffrage), 243-44; 

local, 240-41 
electrical equipment production, 188 
electricity, 173-74, 175-76 
electric motor manufacture, 188 
electronics industry, 147, 188-89 
emigration, 22, 79-81; of Jews, 102; of 

Swedish speakers, 67, 81, 100 
Employees' Pensions Act (1961), 122 
employers' federations, 158 
employment, 156-58; in civil service, 

238-39 

energy {see also district heating; electric- 
ity), consumption and conservation of, 
173-76; industries, 151 

energy sources, 162, 174-75 

energy stockpiling program, 175 

engineering, 147 

Enontekio, 94 

entrepreneurial class, 87 

environmental protection, 133-35 

environmental protection equipment, 179 

Enzo-Gutzeit, 151 

Equality Law (1987), 93 

Erik IX (king of Sweden), 5 

eskers, 75, 76 

Espoo (Helsinki suburb), 84, 340 
Estonia, 4, 35, 40, 213 
Estonians, 5 

Eureka technology, 206, 284 

Europe, Eastern: relations with, 200, 204, 

206, 207, 208, 212 
Europe, Nordic {see also Denmark; 

Iceland; Norway; Sweden), 142, 144, 



429 



Finland: A Country Study 



150-51, 172, 175, 179, 221, 236, 270; 
cooperation in military training of, 327; 
economic cooperation in, 208, 282-84; 
effect of Finland's neutrality on, 279- 
80; labor market in, 208; relations with, 
200, 282; trade policy for, 150-51, 199- 
200, 204; welfare systems of, 118-19 

Europe, Northern: strategic significance 
of, 279-80, 302 

Europe, Western: relations with, xvii, 
200, 284; trade policy for, xxxii, 150, 
199-200, 208-10, 150; trade with, 200, 
204, 205, 206, 207, 208-10 

European Community (EC), xxix, xxx, 
xxxii, 142, 206, 210, 283, 285 

European Economic Community (EEC), 
63, 142, 207, 209, 212, 281, 283, 284 

European Free Trade Association (EFTA), 
xxix, xxxii, 63, 207, 209-10, 281, 283, 
284 

European Payments Union of OEEC, 
284 

European Recovery Program. See Mar- 
shall Plan (European Recovery Pro- 
gram) 

European Space Agency (ESA), 206, 210, 
284 

Evangelical Movement (revivalist move- 
ment), 108 

Evening School meeting (Council of State), 
234, 247 

evening schools, 118 

exchange rate, xviii 

exchange-rate policy {see also currency), 
152, 154; ruble clearing account as, 
211 

executions, 31 

explosives, 327 

export competitiveness, 150 

export licensing, 205 

exports, xvii, 38; of capital, 205; of chem- 
icals, 201; of forest products, 143, 200- 
201; of metal products, 186, 201; to 
Western Europe, 284 

Fagerholm, Karl- August, 56, 60 

family assistance, 125 

family structure: changes in, 73, 90-91 

famine, xxv, 13, 79 

farm cooperatives, 164 

Farm Income Act, 165 

farm production. See agricultural sector 



farms/farmers, xxv, 88, 163-64; control 

of forests by, 169-70 
fascism, xxvii, 4, 37 
Fast Deployment Forces, xix, 303, 309, 

316 

February Manifesto (1899), 23-24, 25 
feed crops, 167 
feminist movement, 92, 262 
Feminists (Feministit), 262 
Feminist Union (Naisasialiitto Unioni), 
262 

Fennoman movement, xxv, 19 
ferrochrome deposits, 177 
ferry manufacture, 187 
Fifth Revival, 108 
Film Censorship Board, 274-75 
film industry, 274 

financial sector, 147, 152, 191-95; com- 
mercial bank services, 193; develop- 
ment of, 181; regulation of, 191-92, 
194 

FINEFTA agreement (1961), 63, 209, 

211, 284 
Finnair, 198, 213 
Finnic tribes, 5, 7 

Finnish Broadcasting Company (Yleis- 
radio: YLE), 270, 271-72, 273 

Finnish Christian League (Suomen 
Kristillinen Liitto: SKL), 67, 260, 267 

Finnish Communist Party-Unity (Suo- 
men Kommunistinen Puolue- 
Yhtenasyys-SKP-Y), 258 

Finnish Export Credit Bank, 193 

Finnish Labor party. See Finnish Social 
Democcratic Party (Suomen Sosiali- 
demokraattinen Puolue: SDP) 

Finnish Military Academy, 293-95, 318- 
19, 337 

Finnish News Agency (Suomen Tietotoi- 

misto: STT), 270 
Finnish People's Democratic League 

(Suomen Kansan Demokraattinen 

Liitto: SKDL), {see also communism); 

54, 66, 249; news agency of, 271; 

representation in Eduskunta of, 267; 

role in Finnish politics of, 55, 56, 60, 

62, 65, 67, 256 
Finnish Rural Party (Suomen Maaseu- 

dun Puolue: SMP), xxxi, 62, 218, 

246-47, 259, 260, 265, 267 
Finnish Small Farmers' Party. See Finnish 

Rural Party (Suomen Maaseudun 

Puolue: SMP) 



430 



Index 



Finnish Social Democratic Party (Suomen 
Sosialidemokraattinen Puolue: SDP), 
xxvi, xxvii, XXX, 21-22, 61, 64, 66, 67, 
218, 239; development and activity of, 
248-52; election of Koivisto as presi- 
dent, 263, 265; news agency of, 271; 
Red Guards of, 294; reorganization of, 

33, 248; representation in Eduskunta, 
25, 26, 58, 65, 248-49, 250, 252, 265, 
267; role in general strike (1917), 29; 
role in Power Act (1917), 27; in Rus- 
sification controversy, 24 

Finnish Socialist Workers' Party (Suomen 
Sosizilistinen Tyovaenpuolue: SSTP), 

34, 255-56 

Finnish-Soviet Intergovernmental Com- 
mission for Economic Cooperation, 
211-12 

Finnish-Soviet Peace and Friendship So- 
ciety (Suomen-Neuvostoliiton rauhan 
ja ystavyyden seura: SNS), 48 

Finnish speakers {see also Constitution- 
alists; Language Ordinance (1863)), 24, 
35; division into two parties of, 34; as 
majority, xxiv; nationalism of, xxiv- 
XXV, 17, 19-20 

Finnish Trade Union Federation (Suo- 
men Ammattijarjesto: SAJ), 21, 34; 
amaJgamation with SAK, 65 

Finno-Ugric language, xxiii, 5, 35, 94 

fiscal policy {see also budget, government; 
debt, domestic; social security taxes; 
spending, government), 152-53, 154- 
55 

fishing industry, 147, 160, 172 

Five- Year Framework Agreement (1951), 
62-63 

float ways, 197 

folk high schools, 118 

food-processing industry, 189-90 

foreign aid, 207 

foreign companies, 205 

Foreign Military Sales Program (United 
States), 329 

foreign policy {see also neutrality; 
Paasikivi-Kekkonen Line), xix, xxix, 
68, 218-19; neutral position and non- 
alignment of, 208, 275 

foreign trade. See trade policy 

Foreign Trade Bank (Soviet Union), 211 

forest land, xxv, 169-72 

forest ownership, xxv, 110, 169-70 

forest products industries {see also forest 



land; log floating; lumber industry; 
paper industry; sledding season; wood; 
wood-processing industries; wood pulp 
industry), xxv, xxviii, xxxii, 85, 143, 
147, 150, 160; foreign aid for expan- 
sion of, 144; foreign exchsmge earnings 
of, 183-84, 200-201; location of, 178; 
response to foreign demand of, 200; 
sales oudets of, 205; transportation for, 
195, 197 

forestry, xvii, 169-71; decline in occupa- 
tions in, 85 

Forest 2000 plan, 171, 184-85 

'Forgotten Finland', 62 

forklift manufacture, 186 

Form of Government Act of 1634 (Sweden), 
219 

France, 40, 85; in Napoleonic wars, 15- 
16; as source of military equipment, xx, 
327-29 

Freedom of Religion Act (1923), 103 
freedom of speech, 222, 273 
Friday Presidential Meeting, 234 
Friedrich Karl (prince of Hesse), 33 
Frontier Guard Department, 332 
Frontier Guard (Rajavartiolaitos: RVL), 
{see also Coast Guard), xix, xx, 303, 
304, 309, 312, 318, 324; organization 
and responsibility of, 336-38 
Frontier Guard School, 337 
Frontier Jaeger Battalions, 337 
fur industry, 167, 172, 191 



Gaza Strip, 327 

General Agreement on Tariffs and Trade 
(GATT), 57, 208, 276, 284 

General Code of 1734 (Sweden), 235 

general strikes: in 1917, 29; in 1956, 58 

geographic location of Finland, xxv, 3, 
73, 74, 291, 298 

geography, xvi, 74-75, 195; in defense 
strategy, 304; regional differences in, 75 

Geological Survey (Ministry of Trade and 
Industry), 177-78 

Germany, aid to Finland in Civil War by, 
26, 33; Baltic Division military as- 
sistance, 30; domination by merchants 
of, 15; Finnish postwar relations with, 
63, 204, 284; Reformation in, 10; rela- 
tions with, 40-41; role for Finland in 
World War I and after, 26, 41 ; role in 
Aland Islands dispute, 39; role in 



431 



Finland: A Country Study 



World War II, 40-43, 47-52; Soviet 
fear of resurgence of, 60; threat from, 
9; trade with, 21, 143, 144; as trading 
partner, 21 

glacier effect, 75, 76 

Golan Heights, 327 

gold deposits, 176 

Gorbachev, Mikhail S., 212 

government intervention {see also nation- 
alization), 147; in agriculture, 151, 164- 
68; in economic development, 150; in 
forest products industries, 169-71; in 
industrial development, 182-91; in min- 
eral industries, 177; in use of energy 
resources, 173-74 

government structure, 217-19; branches 
of, 222-23 

grain crops, 161, 167 

Grand Duchy of Finland, xxiii, xxvi, 
16-17, 207, 220, 338; Diet of, 16-17, 
20, 22, 23, 25; economy of, 142-43; 
Government Council, or Senate, in, 16 

Great Address, 23, 24 

Great Britedn, 40, 49; as source of mili- 
tary equipment, xx, 327-29; trade with, 

144, 209; as trading partner, 21, 63, 144 
Great Depression, xxviii, 144 

Great Migration, xxxii-xxxiii, 83, 84, 91 
Great Northern War (1700-1721), 12-13, 
15 

Great Wrath, 13 

Greater Finland (Suur-Suomi), 35-36, 
40, 249 

Green League (Vihrea Liitto), 261 
the Greens, 134, 253, 259, 260-61 repre- 
sentation in Eduskunta of, 265, 267 
gross domestic product (GDP), xvii, 119, 

145, 146, 157 

gross national product (GNP), 56-57, 

125, 145, 286-87 
Gulf of Bothnia, 7, 35, 75, 76, 79, 84, 

167, 178 

Gulf of Finland, 4, 7, 42, 45, 49, 50, 75, 

84, 178, 299, 311 
Gulf Stream, 79, 160 
Gustav I Vasa (king of Sweden), 10, 12 
Gustav III (king of Sweden), 15, 220 
Gustavus II Adolphus (king of Sweden), 

12 

Gypsies, 73-74, 93-94, 101-2 
Habsburg Empire, 12 



Haider, Frzinz, 41 
Halkola, Kristiina, 258 
Hame Province, 81, 84, 240 
Hamina, 293 

handicapped services, 126, 128 
Hanko naval base, 45 
Hanseatic League, 9 
harbor facilities, 21 
Hats political party, 13 
health, xvii, 74, 131-32 
health care: standards for, 129 
health care system, 129-31; centers of, 
130-31; hospitals and clinics for, 120, 
129; subsidies for, 130 
Health for All by the Year 2000, 132 
health insurance, 120, 122-23 
Hedberg, Fredrik Gabriel, 108 
Helsinki, xxxiii, 19, 33, 40-41, 80, 102- 
03, 108, 109, 192, 269; becomes capi- 
tal city, 17; in civil war, 30-31, 33; 
court of appeals in, 237; as largest 
urban area, 84; mutiny of Russian fleet 
in, 26-27; Naval Academy at, 318; as 
site of SALT talks, 278; Supreme Court 
and Supreme Administrative Court in, 
237; town court in, 340 
Helsinki Accords (1975), xxx, 68 
Helsinki Club, 209, 284 
Helsinki Stock Exchange, 193, 194-95, 
213 

Helsinki- Vantaa airport, 198 
Henry (archbishop of Uppsala), 5 
High Court of Impeachment, 236 
High Court of Impeachment Act, 221 
high-technology products, 147, 178-79, 

188-89, 201 
highways. See roads 
Hider, Adolph, 47, 48 
hoist manufacture, 186 
Holkeri, Harri, xxx, 255, 267, 268- 

69 

Holland, 15 

Hollming, 188, 330 

homogeneity, 73, 93 

Honka, Olavi, 61 

Honka League, 255 

Hoover, Herbert, 285 

hospitals, 120, 129, 131 

housing: allowances for, 120; construc- 
tion, standards, and quantity of, 135- 
37; subsidies for, 74; subsidies through 
Arava legislation for, 135 

Housing Corporation Act, 135 



432 



Index 



Housing Department (Ministry of En- 
vironment), 135 
Housing Mortgage Bank, 135 
Housing Production Act (1953), 135 
Hungary, 296 

hydroelectric plants, 172, 174, 175 



icebreaker manufacture, 141, 179, 187, 
197 

Iceland, 276, 324 

IKL. See Patriotic People's Movement 
(Isanmaallinen Kansanliike: IKL) 

Imatran Voima, 151, 174 

IMF. See International Monetary Fund 
(IMF) 

immigrants, 81 

Immola, 337 

Imperial Russian Army, 293, 294 
import controls {see also tariffs), 145, 204-5 
imports, xvii, 199; of capital, 205; of 
energy resources, 174, 175, 201; offish 
and fish offal, 172; of food, 143; of oil, 
146, 199, 201; of wood, 171 
Inari, 94 

income distribution, 86-87 

incomes agreements {see also wage settle- 
ments), xxxi, 86, 87, 158-60, 247, 
261-62 

income security programs: social insur- 
ance forms of, 120-24; as welfare, 120- 
21, 124-29 

independence (1917), xxvi, xxvii, 3, 26, 
29, 33, 34, 293, 294 

Independence Day (December 6), 29 

India-Pakistan border, 327 

industrialization, xxv-xxvii, 21, 22, 62, 
84-85, 87, 143-45 

Industrialization Fund of Finland (bank), 
193 

industrial relations. See labor-management 
relations 

industrial sector {see also capital forma- 
tion), xvii; development of, xxvi, 57, 
178, 205; geographical distribution of, 
178-79; mergers in, 180-81, 184, 194; 
size and structure of, 179, 181 

infantry regiments, 293 

inflation, xviii, 144-45, 146, 152-53, 156, 
158 

infrastructure, 195, 205; development of, 
20-21; for forest products industries, 
169 



insurance industry, 147; farm coopera- 
tives in, 164; investments of, 195 

interest groups, 218, 261-63 

interest rates, 152, 153 

International Atomic Energy Agency, 278 

International Monetary Fund (IMF), 
208, 284 

investment, direct foreign, 181, 205-6 
Iron Age, 5 

iron and steel production, 177, 186 
iron deposits, 49, 176 
isostatic rebound, 76 
Israel, 327 

Ivan III (grand duke), 10 

jaeger (hght infantry) battalion, 26, 29, 30 
jaeger officers, 294 

jaeger (ranger) brigades, 308-9; Brigade 

80 and 90 forces of, 308-9 
Jakobson, Max, 273, 286 
Japan, 324 

Jewish community, 49, 95, 102-3, 112 

Johti Sabmelazzat, 95 

judicial system. See legal system 



Kaamanen, 313 
Kagal, 25 
Kailas, Uuno, 40 
Kajanoja, Jouko, 257, 268 
Kalevala, xxiv, 4, 19 
Kalevala people, 4 
Kallio, Kyosti, 37, 38, 62 
Kallio Law (Lex Kallio), 38 
Kalmar Union, 9, 10 
Kansallis-Osake-Pankki (KOP), 193 
Karair, 198 

Karelia, xxviii, 7, 42, 83, 111, 259 

Karelia, Eastern, 35-36 

Karelian Isthmus, 5, 39-40, 41, 42-43, 

44, 45, 48, 49, 295 
Karelian tribe, 5, 7 
Karelian wing. See air force 
Karjalainen, Ahti, 65-66 
Kaskinen, 84 
Kauhava, 313, 318 

Kekkonen, Urho, xxix, xxx, 37, 57, 285; 
as Center Party leader, 252-53; Nordic 
NWFZ proposal of, 276-77; opposition 
to, 255, 260; position on neutrality of, 
61, 218, 231, 253, 276; as president, 
xxxi, 58-61, 66, 68, 246-47, 256, 



433 



Finland: A Country Study 



263-64; role in crises with Soviet 
Union, 60-61, 62; special re-election of, 
281; use of spoils system by, 239 

Kemijoki, 174 

Kemijoki River, 79 

Kemira Group, 151, 152, 190 

Kesk. See Center Party (Keskustapuolue: 
Kesk) 

Keski-Suomi Province, 240 

Khrushchev, Nikita, 47, 60, 61, 280 

Kilpisjarvi area, 76 

Kivisto, Kalevi, 268 

Koivisto, Mauno, 65, 67, 68, 231, 232, 

239, 250, 285; presidency of, 263-64, 

267; re-election of, 268-69; support for 

Nordic NWFZ, 277 
KOK. See National Coalition Party (Kan- 

sallinen Kokoomuspuolue: KOK) 
Kola Peninsula, 96, 178, 279, 291, 299- 

300, 313; Soviet military complex of, 

301, 304 
Komissarov articles, 281-82 
Korean War boom, 145 
Korpilampi, spirit of, 64-65 
Kotka, 84 

Kouvala, 237 

Kouvola-Utti, 313 

Kronstadt naval base, 40 

KRP. See Central Criminal PoHce (Kes- 

kusrikospoliisi: KRP) 
Kuopio, 237 

Kuopio Province, 84, 111, 240 
Kuopio-Rissala, 313 
Kuusinen, Otto, 34, 44, 256 
Kymi Province, 81, 84, 240 



labor conflict. See general strikes; lockouts; 
strikes; work stoppages 

labor federations, 261 

labor force {see also employers' federations; 
trade unions); concentrations of em- 
ployment in, 156; decline in agriculture 
and timber industry in, 73, 84; dis- 
placement in rural areas for, 83; on 
farms, xxvi, 163-64; mobility of, 73, 
81, 83-84, 85; occupational shift for, 
85; productivity in industrial sector for, 
178; quality of, xxxii, 157; in shipbuild- 
ing, 187-88; unemployment in, 141, 
154, 156, 157; unrest in, xxxi, 150; 
women in, 38, 91-93; working class in, 
21, 87, 88-89 



labor-management relations, 64-65, 
158-60, 261-62 

Laestadian Movement (revivalist move- 
ment), 107 

Laestadius, Lars Levi, 107 

Lake Ladoga, 5, 44, 48-49, 295 

Lake Onega, 49 

Lake Peipus, 7 

lakes, 75, 76, 160, 169, 172, 195, 197 
Lake Saimaa, 76, 197 
Land Act of 1945, 56 
land ownership: of family farms, xxv, 11, 
163; of forests, xxv, 169; tenant farm- 
ers and Isindless laborers, 22; for war- 
displaced and veterans, 56, 162, 163 
land reform {see also Kallio Law (Lex Kal- 

lio)), xxviii, 22, 38, 141, 144, 163 
Landsting. See Aland Islands 
Language Act of 1922, 35, 97 
Language Manifesto (1900), 23-24 
Language Ordinance (1863), 20 
languages {see also Finnish speakers; Swed- 
ish speakers), 3; determination of na- 
tional, 35, 97-98; development and im- 
portance of Finnish, 9, 17; in educa- 
tional system, 113, 115; Finno-Ugric, 
5; of Gypsies, 101; official, xvi, xxiv- 
XXV, 67, 97-99, 258; Russian, 23-24; 
Sami (Lapp), 94; split between Finnish 
£ind Swedish speakers, xxiv-xxv, 3, 17; 
Swedish, xxiii, 67 
Lapland {see also Satakunta lapland), 52 
75, 76, 79, 80, 291, 298, 301, 302, 
304 

Lapland War (1944-45), 50, 52 

Lappi Province, 240 

Lapps (Sami), 5, 7, 73-74, 93-94; soci- 
ety, economy, and culture of, 94-96, 
102 

Lapua movement, 36-37, 256 
Latvia, 40 

League of Nations: in Aland Islzmds dis- 
pute, 39, 245; expels Soviet Union, 44; 
membership in, 40 

Lebanon, 327 

legal system {see also court system; crimi- 
nal justice system; penal code), xix, 
235-38, 340-44 

Lehdiston Sanomapzilvelu (LSP), 271 

Leino, Yrjo, 55 

Lenin, Vladimir L, 29, 30 

Leningrad, xxviii, 39-40, 42, 49, 279, 
291, 295, 298, 299, 301 



434 



Index 



Lesser Wrath, 15 

Liberal Party, xxv, xxx, 19, 259 

Liberal People's Party (Liberaalinen 

Kansanpuolue: LKP), 65-66, 259-60, 

264-65 
lift manufacture, 186 
lightbulb manufacture, 188 
Liinamaa, Keijo, 66 
Liinamaa Agreement, xxxi, 64 
literacy, 112 
livestock, 167 

living standcird, xviii, xxxiii, 132-33, 156, 
178 

LKP. See Liberal People's Party (Liber- 
aalinen Kansanpuolue: LKP) 

Local Government Act (1976), 240, 242 

lockouts, 159 

log floating, 169, 172 

logging machine manufacture, 186 

Long-term Economic Plan, 212 

Long Wrath (war), 12 

Lonnrot, Elias, xxiv, 19 

Lotta Svard, 36, 50 

LP. See Mobile Police (Liikkuva Poliisi: 
LP) 

lumber industry, 20, 21, 26, 38, 57, 143, 
171, 173 

Luonetjarvi, 313 

Luther, Martin, 10, 11 

Lutheran Church of Finland {see also 
revivalist movements), xvi, 11, 12, 22, 
74, 103; degree of autonomy for, 105- 
6; membership in, 105; organization 
and duties of, 108-10 

Lutheran doctrines, 10, 94 

Luxembourg, 324 

Luxembourg Declaration (1984), 210 
luxury liner manufacture, 187 

machine-building industry, 57, 141, 184, 
186, 201 

macroeconomic policy {see also exchange- 
rate policy; fiscal policy; monetary pol- 
icy), 145-46, 152-56 

magazines, 271 

mail service, 195 

Mainos-TV-Reklam (MTV), 271, 272 

maintenance allowances, 125 

Mannerheim, Carl Gustaf Emil, xxviii, 
37, 41, 293; leader of Whites in civil 
war, 29, 30-31, 33, 294; position in 
negotiations with Soviet Union of, 43 , 



50; as president, 33, 50, 54, 55 
Mannerheim Line, 41, 44, 45 
Mantsala, 37 

manufacturing sector, 85, 182 

March Manifesto, 27 

Margaret I (queen of Denmark), 9 

marriage, 90-91, 100 

Marshall Plan (European Recovery Pro- 
gram), 57, 144, 208, 275, 285 

Marxist-Leninist program, 255 

mass media, 269-75 

match industry, 21 

maternity benefits, xxxiii, 125 

measuring equipment manufacture, 188 

medical personnel, 120 

medical services, 74, 120, 123, 129-31, 
332 

Mental Health Act (1978), 129-30 

mercantilism policy, 15 

merchant marine, 21, 190, 204 

mercury deposits, 177 

metallurgical industries, 56 

metals production, 186 

metalworking industry, 21, 26, 141, 143, 
145, 147, 185, 197; exports of, 201; 
growth of, 179, 185, 200; mergers 
within, 193; overseas expansion of, 205; 
restructuring of, 185-86 

Midsummer Bomb, 66-67 

Miettunen, Martti, 66 

migration {see also Great Migration; refu- 
gees); of early people, 4; of labor force, 
xxxii, 81, 83; of Lapps, 94; pre- and 
post- World War II, 73, 82; to urban 
areas, xxxii-xxxiii, 73, 83-84, 135 

Mikkeli province, 84, 240 

Military Academy. See Finnish Military 
Academy 

military areas, 307 

military cooperation, 56 

military districts, 307-8 

military equipment {see also mines; mis- 
siles); defensive and offensive, 296, 297; 
domestic and foreign manufacture of, 
XX, 327-30 

military preparedness, 292 

military training. See Defense Forces; Fin- 
nish Military Academy 

militia, 294 

minerals: industries, 177; resources, 20, 

141, 172, 176-77 
mines, 52, 297, 310 
mining equipment manufacture, 177, 186 



435 



Finland: A Country Study 



mining industry, 143, 151 

Ministry of Agriculture and Forestry, 
160, 165, 166, 170, 171 

Ministry of Defense, 307 

Ministry of Education, 106, 115, 116 

Ministry of Environment, 134-35; hous- 
ing departments of, 135 

Ministry of Finance, 154 

Ministry of Foreign Affairs, 229, 264 

Ministry of Interior, xx, 324, 332, 333, 
336 

Ministry of Justice, 240 

Ministry of Labor, 158 

Ministry of Social Affairs and Health, 
113, 120, 125, 128, 130, 332; Depart- 
ment of Temperance and Alcohol Pol- 
icy, 128-29 

Ministry of Trade and Industry, 151, 175, 
177, 182, 206 

minority groups, 73-74, 81, 93-103 

missiles, 296, 297, 300, 303, 309, 328-29; 
antitank, 329 

missionary activity, 5 

ML. See The Agrarian Party (Maalaisliitto: 
ML) 

Mobile Police (Liikkuva Poliisi: LP), xx, 
332, 333, 335 

mobilization: in Finland (1939), 42; for 
peacekeeping missions, 326-27; present 
system of, 303, 309; prior to invasion 
of Soviet Union (1941), 48; in wartime, 
307-8 

Molotov, Viacheslav, 48 
monarchism, 33 

monetary policy, 21, 152, 153-54; role of 

Bank of Finland for, 192 
moraines, 75 
Mormons, 103, 112 
mortality rate, 79, 130, 131-32 
Moscow, 13, 213 
most favored nation status, 211 
motti tactic, 44 

MTK. See Confederation of Agricul- 
tural Producers (Maataloustuottajain 
Keskusliitto: MTK) 

municipal council, 240, 243 

Murmansk area, 279, 300 

Murmansk Railroad, 45, 49 

Muscovy, 10 

Muslim community, 94, 102-3, 112 



Namibia, 327 



Napoleon, 16 

Napoleonic wars, 15 

Narcotics Act, 333 

NationsJ Board of Forestry, 170 

National Board of General Education, 

115, 234 
National Board of Health, 130 
National Board of Housing, 135 
National Board of Schools, 128 
National Board of Social Welfare, 126 
National Board of Vocational Education, 

115 

National Board of Waters and the En- 
vironment, 134 

National Coedition Party (Kansallinen 
Kokoomuspuolue: KOK), xxx, 34, 53, 
65, 66-67, 218, 239, 246, 252, 253; at- 
tention to SFP by, 258; development 
and activity of, 252-53, 254-55; forma- 
tion of Honka League by, 255; news 
agency of, 271; representation in 
Eduskunta of, 267 

National Conscription Law (1950), 316 

nationalism, xxiv, 3, 36-37, 39, 93, 96- 
97, 294; of Finnish- speaking people, 
xxiv-xxv, 17, 19-20; Russian, 23; of 
Swedish speakers, 19 

nationalization, 143-44 

National Pension Plan, 121, 122 

National Pensions Act (1957), 121 

National Progressive Party (Kansallinen 
Edistyspuolue: ED), 259 

national security policy, 275; to convey 
idea of military strength, 302-4 

NATO. See North Adantic Treaty Orga- 
nization (NATO) 

natural gas distribution, 174, 175 

natural resources, 20 

Nature Conservation Act (1923), 123 

nature preserves, 134 

Naval Academy, 318 

naval bases, 297 

navy (Merivoimat), 296, 303, 307, 309; 
fleet units of, 310, 312; headquar- 
ters of, 308, 312; limitations for, 
311; mission of, 310-11; vessels of, 
311-12 

Nazism, 37 

Nazi-Soviet Non-Agression Pact (1939), 
42 

Neolithic peoples, 4 

Neste, 151, 152, 174, 175, 190, 212 

neutral, or buffer, zone, 299 



436 



Index 



neutrality {see also Nordic Nuclear- 
Weapons-Free Zone (Nordic NWFZ)), 
xxviii, xxix, 57, 61, 207, 210; conse- 
quences of, 144, 278-82, 285; factors 
contributing to, 4, 199, 275-76; as for- 
eign policy, 199, 278; significance of, 
291 

Neva River, 7 

Nevsky, Alexander. See Alexander of 

Novgorod (prince) 
newspapers, 269-70 
nickel deposits, 38, 47, 49, 50, 52, 176, 

186 

Night Frost Crisis (1958-59), 60, 249, 280 
nobility, 9, 87, 219, 293 
Non-Commissioned Officers School, 319 
Nordic Balance, 280 
Nordic committee system, 262-63 
Nordic Convention on Cooperation, 283 
Nordic Council, xix, xxix, 57, 208, 276, 

280, 282-83 
Nordic Council of Ministers, 283 
Nordic defense union, 276 
Nordic Economic Union (NORDEK), 

283 

Nordic Europe. See Europe, Nordic 

Nordic Investment Bank, 283 

Nordic Nuclear- Weapons-Free Zone 

(Nordic NWZ), xxx, 61, 276-78, 283, 

304 

Nordic Sami Council (1956), 95 
North Adantic Drift Current, 79, 160 
North Atlantic Treaty Organization 
(NATO), 60, 61, 276, 277, 291, 298, 
299; hypothetical operations of, 299- 
300; limitation on bases and weapons 
for, 298 

Northwestern Theater of Military Oper- 
ations, 301 

Norway, 9, 50, 60, 79, 210, 276, 277, 
300; boundary with Finland of, 74, 
298; Finnish investment in, 205; posi- 
tion on neutrality of, 61 

Note Crisis (1961), 60-61, 62, 250, 253, 
255; effect of, 280-81 

Novgorod, 7, 10 

Novosibirsk, 61 

nuclear power plants, 175-76 

Nuclear Test Ban Treaty (1963), 278 

nuclear warfare defense, 304 



October Manifesto (1905), 25 



OECD. See Organisation for Economic 
Co-operation and Development 
(OECD) 

OEEC. See Organisation for European 
Economic Co-operation (OEEC) 

oil: consumption of, 173 

oil-price shocks (1973, 1979), 146, 147, 
162, 174, 178 

oil refining, 175, 179, 190 

Old Finn (Paasikivi), 53 

Old Finn Party, xxv, xxvi, 24, 34, 248, 
254 

Organisation for Economic Co-operation 
and Development (OECD), 134, 145, 
209, 284 

Organisation for European Economic Co- 
operation (OEEC), 208, 209, 284 

Orthodox Church of Finland {see also Ecu- 
menical Patriarchate of Constantinople; 
Russian Orthodox Church), xvi, 103, 
105; membership and affiliation of, 
110-12 

Ostrobothnia area, 76, 96 

Otaniemi, 182, 336, 337 

Otanmaki iron mine, 176, 177 

Ottoman Empire, 15 

Oulu, 183 

Oulujoki River, 79 

Oulu Province, 240 

Outokumpu Group, 151, 152, 177, 178, 
186 

Outokumpu region, 176 

Paasikivi, Juho Kusti, xxix, 33; foreign 
policy of, 57, 218, 231; as KOK party 
leader, 254; negotiations with Soviet 
Union by, 43, 53; position on Finnish 
foreign policy, 278-79; as prime 
minister and president, 53-54, 55, 61 

Paasikivi-Kekkonen Line, 57, 68, 218-19, 
254, 268, 282 

Paasio, Pertti, 252 

Paasio, Rafael, 64, 65, 66, 250, 252 

Pacific Basin, 205 

Pansio naval headquarters, 312 

paper industry, xxviii, 21, 38, 56, 57, 63, 
143, 144, 172, 173; foreign exchange 
earnings of, 184 

paper-making machinery, 141, 179, 184, 
186 

paratroop school, 319 
Parliament Act (1928), 221, 225 



437 



Finland: A Country Study 



parliamentary ombudsman, 235-36 

Patriotic People's Movement (Isanmaal- 
linen Kansanliike: IKL), 37, 50 

peacekeeping activity, xxix-xxx, 326-27 

Peace of Moscow (1940): Kekkonen posi- 
tion on, 58; terms of, 45, 47 

Peace of Noteborg (1323), 7 

Peace of Nystad, 13 

Peace of Pahkinasaari (1323), 7 

Peace of Turku, 15 

Peace of Uusikaupunki (1721), 13, 45 

peat distribution, 174 

peatlands, 174 

Pekkala, Mauno, 55 

Pellervo Society, 164 

Penal Code {see also crime), 338, 340-44; 
addition for defamatory journalism in, 
273-74; outlaw of racid discrimination 
in, 102 

pension plan, national, 119, 120; for em- 
ployees, 122; provisions of, 121-22 
Pentecostal churches, 112 
Persian Gulf, 327 

personnel carriers: A-180 Pasi, 308, 309, 
329 

Petrograd, 248 

Petsamo area, 38, 39, 45, 47, 49, 50, 52; 
ceded to Soviet Union, 50 

Physical Planning and Building Depart- 
ment (Ministry of Environment), 135 

Pietist movement, 22 

pilot training, 319 

pipeline, natural gas, 175 

plains, 75, 76 

planned towns, 136 

plastics industry, 179 

plywood industry, 21 

Pohjois-Karjala province, 84, 132, 240 

Pohjola, 4 

Poland, 20; agreement for military as- 
sistance, 40; defeat by Germany of, 42; 
in Great Northern War, 13; interest in 
Btiltic area of, 12; Russification in, 23; 
trade with, 175 

Police Academy, 336 

Police Act (1925) (1967), 333 

Police Department, 333 

police force: central government respon- 
sibility for, 332; in civil defense, 330; 
drug enforcement by, 344; organization 
of, XX, 332-33, 335; training for, 336 

Police Training Center, 336 

political parties {see also under names of par- 



ties), xix, XXV, xxx-xxxi, 217-18, 246- 

47, 248-61; after independence, 34-36 
political system, xxvii, 217-34, 238-48; 

military role in, 325-26 
pollution, industrial, 133-35, 172 
Poltava (Battle of), 13 
POP. See Constitutional Party of the Right 

(PerustuslaiUinen Oikeistopuolue: POP) 
population, xvi, 79-81, 198; increase or 

loss in some areas of, 83-84; rural, 22; 

urban, 22 
Population Crisis Committee, 91 
population shift. See migration 
Porkkala, 50, 52; return to Finland of, 57, 

280 

Porthan, Henrik Gabriel, 17 

ports, xviii, 195; Kaskinen, 84; Korka, 
84; Petsamo, 38, 39; of Soviet Union, 
291; Viipuri, 197 

Portugal, 210 

Porvoo, 16 

postal service, 198 

Postipankki (bank), 193 

potato, 15, 22, 167 

Power Act (1917), 27 

power plant generator manufacture, 188 

precipitation, 79, 160, 169 

president, xxvii, 217, 221; authority in 
national defense of, 305; foreign affairs 
responsibility of, 231; political respon- 
sibility of, 230; power of, 229-31; pro- 
posals to limit power of, 231 

Press Law of 1919, 274 

price system: agricultural price setting in, 
164, 165-66; government control of, 
174, 182; stability for, 154; stabiliza- 
tion of food prices in, 164 

Primary Health Care Act (1972), 129, 
130 

prime minister, 232 
prisons, 343 
privatization, 152 

prosperity, xxxi-xxxii, xxxiii, 63-64, 

67-68, 73, 87, 141, 145-46 
protectionism, 151, 205, 208, 209 
Protective Forces. See Fast Deployment 
Forces 

Protestant Reformation, 10-12, 112, 
161-62 

Public Telecommunications Agency 
(PTA), 198 

public welfare measures. See social legis- 
lation 



438 



Index 



publishing firms, 273 
pulp industry. See wood pulp industry 
purges in Soviet Union, 256 
pyrite deposits, 176, 177 

quartz deposits, 177 

Raahe, 186 
radiation fallout, 133 
radio, 271 

railroads, xviii, 21, 169, 197 
rain. See precipitation 
Rauma-Repola, 188 
Rautaruukki, 151, 177, 186 
reconstruction, 52, 144 
Red Army of Soviet Union, 47, 295 
Red Cross, 330 

Red-Earth coalition, xxvii, 58, 64, 119, 

249, 252, 254, 258 
Red Guards, 3-4, 25, 26, 27, 29-30, 34, 

39, 45, 294; disadvantages and defeat 

of, 30-3 1 ; imprisonment and massacre 

of, 32, 143 
Red Terror, 31 
reforestation, 170 

Reformation. See Protestant Reformation 
refugees: asylum for Jews, 49; from ter- 
ritories ceded to Soviet Union, xxviii, 
47, 52, 56, 83, 144, 162, 163, 259; pol- 
icy for 93, 287 
reindeer herding, 94, 95, 167 
Relander, Lauri Kristian, 36, 62 
religion {see also ]e.\^s\ Lutheran Church 
of Finland; Mormons; Muslims; Ortho- 
dox Church of Finland; revivalist 
movements; Roman Catholics; state 
churches), xvi, 103-12; in educational 
system, 113-14; role in society of, 103- 
5 

religious freedom, 74, 103, 222 
religious movements. See revivalist 

movements 
Rendulic, Lothar, 52 
Renqvist, Henrik, 108 
reparations payments: to Soviet Union, 

xxxii, 50, 52, 56-57, 144, 145, 182, 

185, 280 
Rescue Service, 330 
reserve force, xix, 42, 291, 293-94, 316, 

324-25; Eduskunta representatives in, 

326; officer candidates, 318 



resettlement policy, xxviii, 56, 83, 162, 
163 

Responsibility of Ministers Act (1922), 
221, 228, 233 

revivzJist movements, 22, 106-8 

revolution, Russian. See Bolshevik Revo- 
lution; Revolution of 1905 (Russia) 

Revolution of 1905 (Russia), xxvi, 25, 26, 
27 

Ries, Tomas, 309 
rights of Finnish people, 222 
Riksdag. See Diet of the Four Estates 
rivers, 79, 134, 160, 169, 172, 195, 197 
roads, xviii, 50, 169, 197, 301, 310 
Rogers, Bernard, 285 
Roman Catholic Church, 103, 112; con- 
version of Swedes by, 5; effect of Luthe- 
ran doctrine on, 10-11; in medieval 
society, 9 
Romania, 296 
root crops, 167 

Roundwood Export Commission, 205 
Rovaniemi, 52, 116, 237, 313, 319 
Royal Prussian Jaeger Battalion, Twenty- 
seventh, 294 
Runeberg, Johan Ludvig, 19 
Ruotsalainen, Paavo, 22, 107 
rural areas: economic assistance for, 67; 
police organization in, 333; p>ostal ser- 
vices for, 198; shift of population from, 
73, 83-84, 85 
Russia: attempt to control Finland by, 7; 
fears of, 23; in Great Northern War, 
1 3 ; influence of, 3 , 7 ; interest in Baltic 
area of, 12; invasion by Swedes of, 7 ; 
invasions of Finland by, 13, 15, 16; 
military assistance in civil war by, 30; 
in Napoleonic wars, 15-16; occupation 
of Finland by, 13, 15, 293; repression 
by, 24-25; revolution in, 25, 26; as 
trading partner, 21 
Russian Empire {see also Grand Duchy of 
Finland; Russification); collapse of, 
26-27, 29, 142, 220; Finland's incor- 
poration into, xxiii, xxv-xxvi, 3, 16, 
102, 207, 293; Finnish army under, 23, 
24; repressive measures of, 23-26 
Russian Orthodox Church, 110-11 
Russification: February Manifesto of 
1899, 23; Finnish protest in Great 
Address, 23-24; Language Manifesto 
of 1900, 23-24; military service law, 
294; objective for complete, 26; policy 



439 



Finland: A Country Study 



for, 40, 220; resistance to, xxvi, 25 
Rus (Swedes), 5 

RVL. See Frontier Guard (Rajavartiolai- 

tos: RVL) 
Rybachiy Peninsula, 45 
rye, 167 
Ryti, Risto, 54 

Saarinen, Aame, 257 
Saimaa Canal, 197 

St. Petersburg (j^^ fl/jo Leningrad; Petro- 
grad), xxiii, xxvi, 16, 17, 23, 25, 81, 
298 

SAJ. See Finnish Trade Union Federation 

(Suomen Ammattijarjesto: SAJ) 
SAK. See Central Organization of Finnish 

Trade Unions (Suomen Ammattiliit- 

tojen Keskusjarjesto: SAK) 
Salla sector, 45 
Salpausselka Ridges, 75, 76 
Sami. See Lapps (Sami) 
Sami language, 94 
Sami Litto, 95 
Sami Parlamenta, 95 
Santahamina, 318 
Satakunta Lapland, 75 
Satakunta wing. See air force 
sawmill machinery, 186 
Scandinavia, 9 
Scandinavian Keel Ridge, 76 
schools: for handicapped children, 127- 

28; for Swedish language, 99 
school system, elementary and secondary, 

113-16 

School System Act (1968), 113 

SDP. See Finnish Social Democratic 
Party (Suomen Sosialidemokraattinen 
Puolue: SDP) 

Sea Guard. See Coast Guard 

Security Police (Suojelupoliisi: SUPO), 
XX, 332, 333, 335-36 

self-government, 240-43 

self-sufficiency policy, 161, 164-65, 199 

service sector {see also banking; commu- 
nications; finance; transportation; 
tourism), xvii, 147, 178, 191-99; ex- 
ports of, 204 

SFP. See Swedish People's Party (Svenska 
Folkpartiet: SFP) 

shipbuilding industry {see also icebreaker 
manufacture), 56, 57, 143, 147, 151, 179, 
187-88; mUitary ships from, 329-30 



shipping {see also merchant marine), con- 
version from wood to iron hulls, 21; 
defense of lanes, 309; as export, 204; 
German, 49 

ships, 195, 328; of Coast Guard, 337-38; 
container, 187; of navy, 310-12; for 
ocean exploration, 187; oceangoing, 
195, 197-98 

sickness insurance. See health insurance 

Sickness Insurance Act (1963), 122, 129 

Sigismund (king of Sweden- Finland), 1 1 

Siilasvuo, Hjalmar, 52 

silver deposits, 176 

the Sinai, 327 

Single European Act, 285 

Sinisalo, Taisto, 257 

Sisu-Auto (SISU), 329-30 

SKDL. See Finnish People's Democratic 
League (Suomen Kansan Demokraat- 
tinen Liitto: SKDL) 

SKL. See Finnish Christian League (Suo- 
men Kristillinen Liitto: SKL) 

SKP. See Communist Party of Finland 
(Suomen Kommunistinen Puolue: 
SKP) 

SKP-Y. See Finnish Communist Party- 
Unity (Suomen Kommunistinen 
Puolue- Yhtenaiyys: SKP-Y) 

slaughterhouse equipment manufacture, 
190 

sledding season, 169 

SMP. See Finnish Rural Party (Suomen 

Maaseudun Puolue: SMP) 
Snellman, Johan Vilhelm, 19 
snow. See precipitation 
SNS. See Finnish-Soviet Peace and 

Friendship Society (Suomen-Neuvo- 

stoliiton rauhan ja ystavyyden seura: 

SNS) 

Social Democratic Union of Workers and 
SmeJl Farmers (Tyovaen ja Pienvil- 
jelijain Sosialidemokraattinen Liitto: 
TPSL), 62, 250 

socialism, 29 

social reform, 27, 38 

Social Security Institute, 120, 124 

social security taxes, 155 

social structure: classes within, 87-90; 
mobility within, xxxii, 85-86; transfor- 
mation of, xxxii, 84-85, 87 

Social Welfare Act (1982), 126 

social welfare system {see also health insur- 
ance; housing allowances; income 



440 



Index 



security programs; pension plan, na- 
tional), xvii, xxxiii, 63-64, 74, 87, 120; 
characteristics of, 119-20; development 
of, 118-19; expansion of, 145-46; sub- 
sidies for, 125-26 

society, medieval, 7, 9 

Society for the Promotion of Lapp Cul- 
ture, 95 

Sodankyla, 94 

Solzhenitsyn, Aleksandr, 275 

Sorsa, Kalevi, 66, 250, 256, 264; admmis- 
tration of, 265-66 

Soviet-Finnish agreement (1940): Aland 
Islands demilitarization under, 298 

Soviet-Finnish peace treaty (1944): of 
Continuation War, 50 

Soviet Union, 34, 79; in Allied Control 
Commission, 54; annexation of Saimaa 
waterway by, 197; attacks Finland 
(1939), xxviii, 41, 44, 295, 298; atten- 
tion to Poland and Balkans by, 49; 
bases and ports of, 44, 280, 291, 
299-301; boundary with, 75; conflict 
with Finland of, 39; cooperation and 
accommodation of Finland with, 4, 
53-54, 62-63, 210-13; crises with, 60; 
defeats in Winter War of, 44-45; fear 
of German resurgence, 60; fleet block- 
aded, 49; Foreign Trade Bank of, 21 1 ; 
imports of energy resources from, 
174-76; interest in Finland of, 291, 
299; intervention in Finnish politics by, 
60; losses in Winter War by, 47; non- 
aggression pact with Finland, 40; offen- 
sives against Finland, 48, 49; position 
on Nordic NWFZ proposal, 277; prox- 
imity of military of, 300-301; purges 
in, 256; relations with Finland of, 52, 
55-56, 218-19, 278-82; reparations 
from Finland to, xxviii, xxxii, 52, 
62-63, 185, 199, 200, 204, 207, 211, 
280; return of Porkkala Peninsula by, 
57, 280; role in Note Crisis of, 60-61; 
as source of military equipment, 327- 
29; sphere of influence (1939), 42; terri- 
tory ceded to, xxviii, 45; trade with, 
xxxii, 62-63, 143, 145, 146, 174, 204, 
207, 208, 210-13; in Winter War, 41-47 

spending, government, 63-64, 153, 
154-56; defense spending, xx, 323-24, 
325; for research and development, 
182-83; for technology research and de- 
velopment, 182-83 



Sprengtporten, Goran, 15, 16 

SSTP. See Finnish Socialist Workers' 

Party (Suomen Sosialistinen Tyovaen- 

puolue: SSTP) 
Stahlberg, Kaarlo Juho, 33, 34, 37 
Stalin, Joseph, 256, 297 
Stalingrad, 49 

standing forces, xix-xx, 291, 292, 303 
State Alcohol Monopoly, 128-29 
state churches {see also Lutheran Church 
of Finland; Orthodox Church of Fin- 
land), xvi, 74, 104-6, 110 
state-controlled enterprises: airlines, 198; 

in mineral industries, 177 
State Granary, 205 

State Investment Fund and Regional De- 
velopment Bank, 193 

state-owned enterprises, 141, 150, 151; in 
chemical industry, 190; in energy sup- 
ply, 174; in metal production, 186; mo- 
nopolies among, 151; sale of shgures for, 
151-52 

state-owned forests, 170 

state-owned land, 170 

State Publishing Office, 234 

State Technical Research Institute, 182 

STK. See Confederation of Finnish Em- 
ployers (Suomen Tyonantajain Keskus- 
liitto: STK) 

stock exchange, 193, 194-95 

Stockholm, xxiii 

Stolypin, Pyotr, 25 

stone deposits, 177 

Strategic Arms Limitation Talks (SALT), 
278 

strategic location, 291; of Finland, 42; 
military importance of, 298-300 

strikes {see also generzil strikes; labor con- 
flict; labor unions), xxxi, 58, 159 

Study Allowances Act (1972), 116 

study centers, 118 

submarines, 311; Soviet, 299 

subsidies: to subscription magazines, 271 

substance abuse. See drug use 

Suez Canal, 327 

suffrage: universal, 243, 258; for women, 

xxvi, 25, 38 
sugar beets, 169 
sulfur deposits, 176 
Suomalaiset tribe, 5 
Suomenselka bogland, 75 
Suomi (Finland), 5 
Suominen, Ilkka, 255 



441 



Finland: A Country Study 



Suomussalmi, 52 

SUPO. See Security Police (Suojelupoliisi: 
SUPO) 

Supplicationists (revivalist movement), 
108 

Supreme Administrative Court, 235, 237- 
38, 274 

Supreme Court, 230, 235, 236-37, 238, 
341 

Survivors' Pension Plan, 121 
Suursaari Island, 50 
Svecoman movement, 19 
Svensk Presstjanst, 271 
Svinhufvud, Pehr Evind, 29, 33, 37 
Svir River, 49 

swamps £ind bogs, xvi, 75, 79, 195 
Sweden, 79, 85, 87, 276; boundary with, 
74; cedes Finland to Russia, xxiii, 16, 
96; creation of empire, 12; declares war 
against Russia, 15; dual kingdom with 
Finland of, xxiii, 219, 293; emigration 
of Finns to, 81; Finnish investment in, 
205; foreign policy of, 12; in Great 
Northern War, 12-13; influence of 
Gustav I Vasa on, 12; integration of 
Finland into, xxiii, 3, 7; military in- 
tervention in Aland Islands dispute, 
39; neutrality and nonedignment of, 
291, 298; peace with Muscovy by, 10; 
power and influence over Finland, 5, 
15; rule by, 3, 12-16; separates from 
Denmark, 10; as source of military 
equipment, xx, 327-29; struggle for 
power by, 10; as trading partner, 63, 
204 

Swedish People's Assembly (Svenska Fin- 
lands Folkting), 99 

Swedish People's Party (Svenska Folk- 
partiet: SFP), xxvi, xxx, 34, 66, 67, 99, 
218, 246; alliance widi SDP of, 258; de- 
velopment and activity of, 258-59; 
news agency of, 271 ; representation in 
Eduskunta of, 259, 264, 265, 267 

Swedish speakers {see also Svecomcin 
movement), 24, 34, 35, 67, 73, 81, 93, 
96-101; Alanders as, 39, 96, 221; early 
setders, xxiii; guarantee for language 
of, xxvii, 258; nationalist movement of, 
19; representation among, 67, 99-101, 
259; rights limited for, 252; as ruling 
minority, xxiv, 15 

Swedish Vikings, 5 

Synod (Lutheran Church), 109 



Syria, 327 



TampeUa, 330 

Tampere, 84, 336 

Tampere-Pirkkala, 313 

tanks, 328-29; T-72, T-55, 308 

Tanner, Vaino, 33, 34, 47, 60, 248-49; 

negotiation with Soviet Union by, 43 
Tapiola, xxxiii, 136 
tariffs, 209 
Tavastians tribe, 5 
taxes. See fiscal policy 
technology, 182-83; emphasis on high, 

188-89; for wood processing, 184 
Technology Development Center (Tekno- 

logian Kehittamiskeskus: TEKES), 

189, 206 
technology parks, 183 
telecommunications services, xviii, 195, 

198 

telephone systems, 198 
television, 271-72 
Temperamce Act, 333 
tenant farmers, 38 

territory ceded, xxviii, 45, 144, 162; to 

Soviet Union (1940), 295 
terrorism, 31-32, 36-37 
Teutonic Knights, 7 
textile industry, 21, 151, 190-91, 201 
Third ParUamentary Defense Committee, 

305, 324 

Third World countries: aid to, 207, 283; 

relations of Finland with, 285 
Thirty Years' War, 12 
Thomson-CSF radar, 313 
Tikkakoski, 313 
Tilsit, 16 

timber industry, xxviii, xxxii, 20, 63; 

labor force decline for, 73 
Timoshenko, S. K., 45 
topography, xvi, 75-79, 301-2 
torpedo boats, 311 
tourist industry, 199, 204 
town courts. See court system 
TPSL. See Social Democratic Union of 

Workers and Small Farmers (Tyovaen 

ja Pienviljelijain Sosialidemokraattinen 

Liitto: TPSL) 
tractor manufacture, 186 
trade liberalization, 142, 145, 146, 150, 

179; effect of, 185 
trade performance, 200, 206 



442 



Index 



trade policy {see also export licensing; im- 
port controls; protectionism); barter 
trade with Soviet Union, xxxii, 207, 
211; dumping of agricultural products, 
164; for energy resources, 174-75; in- 
fluence of Soviet Union on, 208; liber- 
alization of, XXV, 142, 200, 209; 
postwar, 204-5; for Western Europe, 
xxxii, 208-10 

trade unions, xxxi, 21, 34, 58, 158 

trading partners, xvii, 63 

transportation {see also rivers; waterways, 
inland); manufacture of equipment for, 
187-88; pipeline, 175; rail, water, and 
air, 195; by truck, 195, 197 

transportation sector {see also automobile 
industry; railroad locomotives; ship- 
building industry), 85, 147, 173; pub- 
lic, 199 

Treaty of Brest-Litovsk (1918), 30 
Treaty of Commerce (1947) {see also Five- 

Year Framework Agreement), 62-63, 

211 

Treaty of Dorpat, or Tartu (1920), 35, 
38, 39, 53 

Treaty of Fredrikshamn, 16 

Treaty of Friendship, Cooperation and 
Mutual Assistance: FCMA(1948): in- 
fluence of, 281; meaning for Finland 
and Soviet Union of, 279, 291-92, 297; 
neutrality conception, 275, 279; in Note 
Crisis, 60-61 ; provisions of, xix, xxix, 
55-56, 254, 325-26; renewal of, xxix, 
264, 297 

Treaty of Hamina, 16 

Treaty of Helsinki (1962), 283 

Treaty of Paris (1947), xix, xxix, 54, 62, 
279, 291; Aland Islands demilitariza- 
tion under, 298; requirements for 
Finland of, 296-97, 311, 325-26 

Treaty of Varala, 15 

Treaty on the Non-Proliferation of 
Nuclear Weapons, 278 

Trotsky, Leon, 30 

Turku, 17, 19, 84, 102, 109, 235, 269, 
312; Chambers of Police in, 332-33; 
court of appeal in, 237; in medieval 
times, 9 

Turku diocese, 9, 12, 108 

Turku ja Pori Province, 81, 84, 240 

TVK. See Confederation of Salaried Em- 
ployees and Civil Servants (Toimi- 
henkilo ja Virkamiesjarjestojen 



Keskushitto: TVK) 



UBF. See Union Bank of Finland (Suo- 
men Yhdyspankki: UBF) 

unemployment, xviii, 120, 141, 154, 156; 
assistance for, 119-20; insurance for, 
123-24; programs to reduce, 157-58 

Unemployment Security Act (1984), 123 

Union Bank of Finland (Suomen Yh- 
dyspankki: UBF), 193 

unions. See agricultural unions; trade 
unions 

United Nations Convention on the Elimi- 
nation of All Forms of Discrimination 
Against Women (1986), 92 

United Nations Development Programme 
(UNDP), 286 

United Nations Disengagement Observ- 
er Force (UNDOF), 327 

United Nations Emergency Force II 
(UNEF II), 327 

United Nations Emergency Fund 
(UNEF), 327 

United Nations Force in Cyprus (UN- 
FICYP), 327 

United Nations Interim Force (UNIFIL), 
327 

United Nations (UN), xix, xxix, 57, 219, 
276, 277, 280, 283, 286; Finland's role 
in, 326-27; policy of Finland in, 286 

United States: Department of Defense of, 
301; economic assistance from, 143; 
Export-Import Bank credits from, 57, 
144; Finnish investment in, 205; For- 
eign Military Sales Program, 329; im- 
migration of Finns to, 22; investment 
by Finnish firms in, 181; relations of 
Finland with, 285; respect for Finland 
of, 49; as source of military equipment, 
XX, 327-29; as trading partner, 63, 175, 
204 

United States Arms Control and Disar- 
mament Agency, 324 

University of Helsinki, xxv, 12, 19, 99, 
116 

University of Lapland, 116 
University of Turku, 17, 19 
university system, 115, 116-17 
upland Finland, 75, 76, 79 
upper class, 89-90 
uranium, 174 



443 



Finland: A Country Study 



urban areas: shift of population to, 67, 73, 

83-84, 85 
Ustinov, Dmitri, 282 
Utsjoki, 94 

Uusimaa Province, 80, 84, 240 
Uutiskeskus (UK), 271 



Vaasa, 237 

Vaasa Province, 167, 240 

Valmet Group, 151-52, 188, 329-30 

ValviUa, 151 

vanadium deposits, 177 

Vantaa (Helsinki suburb), 84, 340 

Vapo, 174 

Vasa, Gustav, 10 

Vasteras, 10 

Vayrynen, Paavo, 253, 266, 267-69 
vegetable crops, 167 
Vennamo, Pekka, 260 
Vennamo, Veikko, 62, 260 
Viipuri, 9, 10, 13, 45, 197 
Viking Age, 5 
Virolainen, Johannes, 253 
vocational course centers, 118 
Volga River basin, 4 
Vyborg. See Viipuri 



wages {see also income security programs); 
in industrial sector, 178; settlements 
for, 152, 154, 158-60; structure of, 
86-87 

War College, 319 

war crimes trials, 54, 60 

War of Independence, 32 

Warsaw Pact, 291, 299 

Wartsila, 188, 330 

waterways, inland {see also canals; float- 
ways; lakes; rivers), xviii, 21, 169, 195, 
197 

We Demand {me vaadimme), 27 
Welfare for Intoxicant Abusers Act 

(1985), 128 
Welfare of the Disabled Act (1946), 126 
welfare state. See social welfare system 
West Berlin, 60 

Western Europe. See Europe, Western 
wheat, 167 



White Army, 294 

White Guards, 3-4, 25, 27, 29-31, 294; 

after winning civil war, 31-32; Civil 

Guard derivation from, 295 
White Sea, 35 
White Terror, 31-32 
winter {see also sledding season), 76, 79, 

160, 169, 195, 197, 301, 302 
Winter War (1939-40), xxviii, 41-47, 48, 

144, 162, 285, 324; causes of, 42-43; 

Finland's losses in, 47; lessons of, 292, 

326 

Wittenberg, 11 

women {see also feminist movement); of 
Civil Guard, 36; in Defense Forces and 
air force, 315-16, 325; in labor force, 
38, 91, 262; mortality rate among, 132; 
in police force, 332; role in politics of, 
262; role in society of, 73, 91-93; suf- 
frage for, xxvi, 25, 38, 91; wage dis- 
crimination for, 92 

wood as energy source, 174 

wood-processing industries {see also lum- 
ber industry; paper industry), 20-21, 
141, 143-44, 147, 150, 169, 179, 
183-84; mergers among, 184, 193; 
productivity of, 147; state ownership in, 
151 

wood pulp industry, xxviii, 21, 38, 56, 57, 
63, 143, 173 

workmen's compensation, 124 

work stoppages, 159-60 

World Bank, 208, 276 

World Health Organization, 132 

World War I, 25-26 

World War II {see also Continuation War 
(1940-44); Winter War (1939-40)); ef- 
fect on Finland of, xxviii, 52-53, 56, 
97, 217; emigration after, 81 

YLE. See Finnish Broadcasting Compa- 
ny (Yleisradio: YLE) 

Young Finn Party, xxv, xxvi, 24, 34, 254, 
259 



Zhdanov, Andrei, 54 

zinc deposits, 176, 177, 186 



444 



Published Country Studies 



(Area Handbook Series) 



550-65 


Afghanistan 


550-153 


Ghana 


550-98 


Albania 


550-87 


Greece 


550-44 


Algeria 


550-78 


Guatemala 


550-59 


Angola 


550-174 


Guinea 


550-73 


Argentina 


550-82 


Guyana 


550-169 


Australia 


550-151 


Honduras 


550-176 


Austria 


550-165 


Hungary 


550-175 


Bangladesh 


550-21 


India 


550-170 


Belgium 


550-154 


Indian Ocean 


550-66 


Bolivia 


550-39 


Indonesia 


550-20 


Brazil 


550-68 


Iran 


550-168 


Bulgaria 


550-31 


Iraq 


550-61 


Burma 


550-25 


Israel 


550-37 


Burundi/Rwanda 


550-182 


Italy 


550-50 


Cambodia 


550-30 


Japan 


550-166 


Cameroon 


550-34 


Jordan 


550-159 


Chad 


550-56 


Kenya 


550-77 


Chile 


550-81 


Korea, North 


550-60 


China 


550-41 


Korea, South 


550-26 


Colombia 


550-58 


Laos 


550-33 


Commonwealth Caribbean, 


550-24 


Lebanon 




Islands of the 






550-91 


Congo 


550-38 


Liberia 


550-90 


Costa Rica 


550-85 


Libya 


550-69 


Cote d'lvoire (Ivory Coast) 


550-172 


Malawi 


550-152 


Cuba 


550-45 


Malaysia 


550-22 


Cyprus 


550-161 


Mauritania 


550-158 


Czechoslovakia 


550-79 


Mexico 


550-36 


Dominican Republic/Haiti 


550-76 


Mongolia 


550-52 


Ecuador 


550-49 


Morocco 


550-43 


Egypt 


550-64 


Mozambique 


550-150 


El Salvador 


550-88 


Nicaragua 


550-28 


Ethiopia 


550-157 


Nigeria 


550-167 


Finland 


550-94 


Oceania 


550-155 


Germany, East 


550-48 


Pakistan 


550-173 


Germany, Fed. Rep. of 


550-46 


Panama 



445 



550-156 


Paraguay 


550-89 


Tunisia 


550-185 


Persian Gulf States 


550-80 


Turkey 


550-42 


Peru 


550-74 


Uganda 


550-72 




550-97 


T Tniomav 


550-162 


Poland 


550-71 


V CllCZiUCla 


550-181 


Portugal 


550-32 


Vietnam 


550-160 


Romania 


550-183 


Yemens, The 


550-51 


Saudi Arabia 


550-99 


Yugoslavia 


550-70 




550-67 




550-180 


Siprrfl T .fonf 


550-75 


£j alii LI id 


550-184 


Singapore 


550-171 


Zimbabwe 


550-86 


Somalia 






550-93 








550-95 


^f\\7if*t TTnir^n 






550-179 


Spain 






550-96 


Sri T sinirsi 






550-27 


Sudan 






550-47 


Syria 






550-62 


Tanzania 






550-53 


Thailand 







446 



PIN: 006979-000 



